Suppose that on January 1 2009,  the TL price of the dollar is 1.40 over    the year, inflation rate in Turkey  is 25 % and U.S. inflation rate is  10%. If the       exchange rate is $1= 1.50 TL at the end of the year, which currency appear to be  overvalued.? Explain your answer

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter11: Foreign Exchange, Trade, And Bubbles
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Suppose that on January 1 2009,  the TL price of the dollar is 1.40 over    the year, inflation rate in Turkey  is 25 % and U.S. inflation rate is  10%. If the       exchange rate is $1= 1.50 TL at the end of the year, which currency appear to be  overvalued.? Explain your answer

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