Predict the expected spot exchange rate between the Japanese yen and U.S. dollar, given that inflation in Japan, at 8%, is 4% higher than in the United States and that the current spot rate is ¥107/$1.
A) ¥102.72/$1
B) ¥103.04/$1
C) ¥111.12/$1
D) ¥111.28/$1
Correct Answer:
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