Answered

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Suppose the annual inflation rate in the US is expected to be 2.5%, while it is expected to be 18.00 % in Mexico. The current spot rate (on 1/1/XO) for the Mexican Peso (MXN) is $0.1000. According to Purchasing Power Parity, expected percentage change in the price of the MXN during a one-year period should be:
A. -13.14%
B. 86.86%
C. 15.12%
D. 1.15%

Sagot :

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