Brazil Mexico Argentina United States Price of 1 coconut BRC 2000 MEP 5...

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Brazil Mexico Argentina United States
Price of 1 coconut BRC 2000 MEP 5 ARP 1.5 USD 1.4
Exchange Rate (in BRC) BRC/MEP 400 BRC/APR 1,200 BRC/USD 1,400

1. Does Absolute Purchasing Power Parity hold for the BRC with respect to the MEP, ARP, and the USD?

2. Expected annual inflation is 100 percent in Brazil, 12 percent in Mexico, 25 percent in Argentina, and 6 percent in the United States. According to Relative PPP, what are the expected spot rates (in BRC) one year from now?

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