"Since you have posted multiple questions, we will provide the solution only to the first question as per our Q&A guidelines. Please repost the remaining questions separately." Relative Purchasing Power Parity (PPP) predicts the relationship between inflation rates and exchange rates between two countries. Step 2: Inflation in markets of Canada. The expected future rate is 0.78 USD per CAD The spot rate is 0.8 USD per CAD The inflation rate of the US is 0.045 The formula to ascertain the relative PPP rate is as follows: 1+ Domestic inflation S₁ = So 1+ Foreign inflation St is the expected future rate So is the spot rate t is periods into the future Substitute the values in the formula 0.78 0.8 1 + 0.045 1+ Foreign inflation 1.045 0.78 0.8 1+ Foreign inflation 1+ Foreign inflation = 1.0718 Foreign inflation = 0.0718

"Since you have posted multiple questions, we will provide the solution only to the first question as per our Q&A guidelines. Please repost the remaining questions separately." Relative Purchasing Power Parity (PPP) predicts the relationship between inflation rates and exchange rates between two countries. Step 2: Inflation in markets of Canada. The expected future rate is 0.78 USD per CAD The spot rate is 0.8 USD per CAD The inflation rate of the US is 0.045 The formula to ascertain the relative PPP rate is as follows: 1+ Domestic inflation S₁ = So 1+ Foreign inflation St is the expected future rate So is the spot rate t is periods into the future Substitute the values in the formula 0.78 0.8 1 + 0.045 1+ Foreign inflation 1.045 0.78 0.8 1+ Foreign inflation 1+ Foreign inflation = 1.0718 Foreign inflation = 0.0718

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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