The spot rate between the Mexican peso and the U. S. dollar is Ps11.25 per $1. The expected inflation rate in the U. S. is 2 percent and the U. S. Treasury bill is yielding 5 percent. The risk-free rate of return in Mexico is 6 percent. Ignoring the Fisher effect, what is the rate of inflation in Mexico assuming relative PPP holds
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The spot rate between the Mexican peso and the U. S. dollar is Ps11.25 per $1. The expected inflatio...
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