Currently, You Can Exchange €100 for $132

question 57

Multiple Choice

Currently, you can exchange €100 for $132.66. The inflation rate in Euroland is expected to be 3.1 percent as compared to 3.6 percent in the U.S. Assuming that relative purchasing power parity exists, what should the exchange rate be 5 years from now?

• A) €.7298/$1
• B) €.7351/$1
• C) €.7367/$1
• D) €.7405/$1
• E) €.7423/$1

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