Assume that, over the course of a year, the inflation rate in Peru was 14.5% and in

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Question:

Assume that, over the course of a year, the inflation rate in Peru was 14.5% and in America 1.7%. Then, according to the relative purchasing power parity, what would you expect for the exchange rate of the 2 currencies? Comment on how this will affect the competitiveness of Peru's economy