Question: Question 6 (16 marks) Two countries, the United States and the United Kingdom, produce only one good, saying wheat. Suppose the price of wheat is

Question 6 (16 marks) Two countries, the United States and the United Kingdom, produce only one good, saying wheat. Suppose the price of wheat is $2 in the United States and is 1 in England. a) According to the law of one price, what the $: spot exchange rate should be? (8marks) b) Suppose the price of wheat over the next year is expected to rise to $3.50 in the United States and to 1.5 in the United Kingdom. What should the one-year $: forward rate be? (8marks)

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