Business, 30.10.2019 06:31 hebagaroudi54111

You are given the following information. the current dollar-pound exchangerate is $1.5 per pound. a u. s. basket that costs $100 would cost 80 poundsin theu. k. for thenext year, thefederal reserve is predicted to keep u. s. inflation at 2%, and the bank of england is predicted to keep u. k. inflation at 3%. the speed of convergenceto absoluteppp is 15% per year. a)what is the expected us minus uk inflation differential for coming year?

b)what is the current us real exchange rate qus/uk with the uk?

c) how much is the dollar overvalued/ undervalued?

d)what do you predict the us real exchange rate with uk will be in one year's time?

e)what is the expected rate of real depreciation for us(versus the uk)?

f)what is the expected rate of nominal depreciation for the us(versus the uk)?

g) what do you predict will be the dollar price of one pound a year from now?

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You are given the following information. the current dollar-pound exchangerate is $1.5 per pound. a...

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