a) The price of one liter of oil is 1.95 EUR in France. The price of one gallon of oil is 3.8 USD in the US. Based on the Absolute PPP, compute the EUR/USD spot price.?
b) In 2023, inflation is expected to be 2% in the US and 5% in Austria. Based on the Relativre PPP, which of the two currencies (EUR or USD) should go up and by what %?
c) Today, the spot EUR/USD is 1.04. If the Relative PPP holds, compute the expected one-year future spot EUR/USD/

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a The EURUSD spot price is 195 EUR38 USD 051 EURUSD b The EUR should go up by 3 5 2 c The expected o... View the full answer