Question: Can I get detailed explanation and answer for this question? Inflation in Brazil is 5% and in the US it is 2%.The GDP growth rate
Can I get detailed explanation and answer for this question?
Inflation in Brazil is 5% and in the US it is 2%.The GDP growth rate is 2% in both countries.The exchange rate is 7 Brazilian real (BRL) per USD.Use Brazil as the domestic country.
a.If PPP is true, what will the BRL/USD exchange rate be next year?
b.If PPP is true, what will happen to the real exchange rate?Explain with an equation.
If the quantity theory of money is correct, how fast is the money supply growing in Brazil and the US?
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