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QUESTION 6 6.666 Use the follwing information to answer the next two questions Investors expect...

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QUESTION 6 6.666 Use the follwing information to answer the next two questions Investors expect inflation rates over the next twelve months in the US and Japan to be 8% and 3%, respectively. The current exchange rates for the two currencies are as follows: C$.007N, C$1.02/$ Suppose that twelve months from now, the exchange rate between US dollars and yen is $.0071N. According to relative PPP, what be the impact of this new exchange rate on the US balance of trade? (Assume the US is the home country and ignore any possible feedback loop.) Round intermediate steps to four decimals. 0 The US BOT will increase. The US BOT will decrease O The US BOT will not be affected. O Cannot be determined QUESTION 7 6.66667 pol What should have been the percentage change in the value of yen in terms of US dollars be accarding to relative PPP? Round intermediate steps and your final answer to four decimal and enter your answer in decimal format (EX:xxX)

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