/ spot exchange rate is 114/. The 1 year expected inflation rate is 3% in...
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/ spot exchange rate is 114/. The 1 year expected inflation rate is 3% in Japan, and 5% in Euroland, respectively. All others being equal, if the actual (ex post) nominal exchange rate turns out to be 112.91/ after a year, what is the real rate of appreciation (or depreciation) of the base currency over this period? Select one:
a. Yen has a real appreciation of 2%.
b. Euro has a real depreciation of 1%.
c. Yen has a real depreciation of 2%.
d. Euro has a real appreciation of 1%.
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