Question: DO NOT COPY ANSWER FROM ANOTHER USER, Looking for another point of view, method. Thank you. 4.10) Suppose that a basket of consumer goods has

 DO NOT COPY ANSWER FROM ANOTHER USER, Looking for another point

DO NOT COPY ANSWER FROM ANOTHER USER, Looking for another point of view, method. Thank you.

4.10) Suppose that a basket of consumer goods has values P. P=100 and P, f=1 in currencies D and F, so that SDF = D100F. Expected inflation is E[pj=10 percent and E[p"]=21 percent over the foreseeable future. A. What are the expected price levels E[P,F) and E[P_P) and the expected nominal exchange rate E[S, DE] in one period? B. What is the expected real exchange rate X, f in one period using time zero as a base? C. What are the expected price levels in each country (E[P_ ] and E[P2"]) and the expected real exchange rate E[X,DF) in two years? DF

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