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In September 2017: The currency in Japan is Yen. Japan had an inflation rate of 0. The currency in UK is Pound. UK had an inflation rate of 2.
In September 2017:
• The currency in Japan is Yen. Japan had an inflation rate of 0.7.
• The currency in UK is Pound. UK had an inflation rate of 2.87.
• The published exchange rate in Japan was 151 Yen per Pound.
Answer the following questions given the September 2017 short-run trend in the exchange rate for Pound in Japan, ceteris paribus? Show your work.
(a) (6 points) What will be the nominal exchange rate one year after September 2017 ?
(b) (6 points) What will be the published exchange rate one year after September 2017 ?
