Suppose the current spot rate between a foreign country and Canada is Fc54.2 per $1. Expected inflation in the foreign country is 57% and expected inflation in Canada is 4%. If relative PPP holds,
What is the expected percentage change in the exchange rate over the next year?
A) 29%
B) 48%
C) 53%
D) 64%
E) 106%
Correct Answer:
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