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QUESTION
A German car now costs 50,000. The spot exchange rate is A$1. If the expected inflation rates in Australia and Germany are respectively 1.6% and 2.
A German car now costs €50,000. The spot exchange rate is A$1.40/€. If the expected inflation rates in Australia and Germany are respectively 1.6% and 2.0%, what will be the Australian dollar price of that car 1 year from now if there is 100% exchange rate pass through?
