Problem

Inflation and Exchange Rates. Suppose the current exchange rate for the Russian ruble is R...

Inflation and Exchange Rates. Suppose the current exchange rate for the Russian ruble is RUB 34.50. The expected exchange rate in three years is RUB 37.78. What is the difference in the annual inflation rates for the United States and Russia over this period? Assume that the anticipated rate is constant for both countries. What relationship are you relying on in answering?

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Solutions For Problems in Chapter 18