Suppose the initial exchange rate between the USD and Thai bhat (THB) is 31 THB...
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Suppose the initial exchange rate between the USD and Thai bhat (THB) is 31 THB = 1 USD, and that after 3 years the observed nominal exchange rate is S3 is 37.26 = 1 USD. Over the course of the 3 years, US inflation averaged 1.5% and inflation in Thailand averaged 2% per year. This means that after 3 years, the price level in the US was 104.57 and in Thailand it was 106.12. After 3 years, what was the real THB/USD exchange rate, q3? _____ THB = 1 USD Include two decimal places in your answer.
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