What Is the Expected German Inflation Rate If 3% Inflation

question 1

Multiple Choice

What is the expected German inflation rate if 3% inflation is expected in the United States, the spot exchange rate is €1.5/$ and the expected spot rate is €1.6/$?

• A) 2.81%
• B) 7.10%
• C) 9.87%
• D)11.43%

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Definitions:

Tectonic Terrane

A fragment of crustal material formed on, or broken off from one tectonic plate and accreted or sutured to crust lying on another plate.

Continental Crust

The thick part of the Earth's crust that forms the continents, characterized by its buoyancy and primarily granitic composition.

Passive Margin

A type of continental margin that is not an active plate boundary, characterized by little volcanic and earthquake activity.

Indonesian Earthquake

A seismic event occurring in Indonesia, a country prone to earthquakes due to its location on the Pacific "Ring of Fire."