Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?

anticipate the dollar’s exchange rate against the euro to remain constant

anticipate the dollar to depreciate against the euro

anticipate the dollar to appreciate against the euro

have no anticipation concerning future movements in the dollar/euro exchange rate

Suppose that the purchasing power parity estimate of the dollar/euro

1.	Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?
A.	anticipate the dollar to depreciate against the euro
B.	anticipate the dollar to appreciate against the euro
C.	anticipate the dollar’s exchange rate against the euro to remain constant
D.	have no anticipation concerning future movements in the dollar/euro exchange rate
Answer» C. anticipate the dollar’s exchange rate against the euro to remain constant

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Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?

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