Question: Suppose the current spot rate for the euro is $1.25 per EUR. The US expected inflation rate for next year is 4%, and the euro

Suppose the current spot rate for the euro is $1.25 per EUR. The US expected inflation rate for next year is 4%, and the euro expected inflation rate for next year is 3%. According to PPP (approximate version), the spot rate for the euro in one year will be None of the above $1.2625 per EUR $1.2501 per EUR w $1.2375 per EUR

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