Ask Question
18 December, 17:03

Suppose the current exchange rate for the Polish zloty is Z 2.92. The expected exchange rate in three years is Z 3.00. What is the difference in the annual inflation rates for the United States and Poland over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

+3
Answers (1)
  1. 18 December, 20:27
    0
    The answer is 91% or Supposed to be 0.00905

    Explanation:

    We can use the relative purchasing power parity equation:

    Ft = S0 * [1 + (hFC - hUS) ]t

    We can find:

    Z 3.00 = Z 2.92 [1 + (hFC - hUS) ]3

    hFC - hUS = (Z 3.00/Z 2.92) 1/3 - 1

    hFC - hUS =.00905

    The Inflation in Poland is expected to exceed that in the U. S. by 91% over this period.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Suppose the current exchange rate for the Polish zloty is Z 2.92. The expected exchange rate in three years is Z 3.00. What is the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers