Question: Please include steps and explanations, thank you Question 3. Imagine that we live in a four-country world where people only grow and eat small, green

Please include steps and explanations, thank you

Please include steps and explanations, thank you Question 3. Imagine that we

Question 3. Imagine that we live in a four-country world where people only grow and eat small, green cucumbers. We have the following data: (a) Does the Absolute Purchasing Power Parity hold for the R$ with respect to the MEP, ARP, and the USD? (b) What is the real exchange rate for the R$ with respect to the MEP, ARP, and the USD? (c) If Brazil trades equally with each country, what is the real effective exchange rate for the R$ ? (d) Is the cost of living in Brazil lower or higher than in Mexico, Argentina, and the US? (e) Expected annual inflation is 100% in Brazil, 12\% in Mexico, 25\% in Argentina, and 6% in the United States. According to Relative PPP, what are the expected spot rates (in R$ ) one year from now

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