Exchange rate movements Suppose a basket of goods in Paris costs 132 and the same basket...

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Exchange rate movements Suppose a basket of goods in Paris costs €132 and the same basket purchased in New York costs $152. a. At what exchange rate between euros and dollars is the cost of the basket the same in each city? b. Now suppose that over the next year inflation in France is expected to be 4% while in the US the forecast is for 6% inflation. What exchange rate do you expect a year from now? a. The exchange rate between euros and dollars, at which the cost of the basket of goods is the same in each city is €/$. (Round to four decimal places.) Exchange rate movements Suppose a basket of goods in Paris costs €132 and the same basket purchased in New York costs $152. a. At what exchange rate between euros and dollars is the cost of the basket the same in each city? b. Now suppose that over the next year inflation in France is expected to be 4% while in the US the forecast is for 6% inflation. What exchange rate do you expect a year from now? a. The exchange rate between euros and dollars, at which the cost of the basket of goods is the same in each city is €/$. (Round to four decimal places.)

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a Basket q goods Same Basket purchased in b IE As per Purchase Power Parity T... View the full answer