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Economics
MEDIUM
ENGLISH
Economics
Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?
A
anticipate the dollar to depreciate against the euro
Option A
anticipate the dollar to appreciate against the euro
Correct answer
C
anticipate the dollar’s exchange rate against the euro to remain constant
Option C
D
have no anticipation concerning future movements in the dollar/euro exchange rate
Option D
Correct answer: B
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