Question: 1. . (20 points) Currently, the exchange rate between the U.S. dollar and the euro is er = 0.92 euros per dollar. The price of

1. . (20 points) Currently, the exchange rate between the U.S. dollar and the euro is er = 0.92 euros per dollar. The price of a Big Mac in the Eurozone is 4.35 euros, whereas in the U.S., it is $5.91. The expected inflation rate in the U.S. over the next two years is us = 3.0% per year, and the expected inflation rate in the Eurozone is EUR = 1.0% over those same two years. D. (4) According to the theory of Purchasing Power Parity, what is the nominal exchange rate expected to be in two years (three decimal places)

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