Question: Question 7 The U.S. inflation rate is expected to be 5% over the next year, while the European inflation rate is expected to be 5%.

Question 7

The U.S. inflation rate is expected to be 5% over the next year, while the European inflation rate is expected to be 5%. The current spot rate of the euro is $1.03. Using purchasing power parity, the expected spot rate at the end of one year is $____.

		1.02
		1.03
		1.04
		1.05

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