What will the same gadget cost

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Reference no: EM132021964

1. A gadget costs $18.62 in the U.S. If absolute purchasing power parity exists, what will the same gadget cost in Canada if the direct quote is 0.98?

C$18.17

C$19.00

C$20.11

C$17.43

C$16.25

2. Assume the inflation rate in the U.S. is 1.8 percent. The spot rate for a foreign currency is .94 while the 1-year forward rate is .97. What is the approximate rate of inflation in the foreign country?

5.72%

5.34%

4.99%

3.86%

2.97%

Reference no: EM132021964

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