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Treasury, Foreign Exchange and Financilization
Finance & Accounting
Pages 7 (1757 words)
Treasury, Foreign Exchange and Financialization (1) The US inflation rates from 2002-2007 are as follows: (International Monetary Fund 2002-2007) The inflation rates of countries have been calculated according to the formula: Inflation rate of the country in year1 = (CPI in year 1- CPI of the previous year) / CPI of the previous year where CPI: Consumer Price Index The Purchasing Power Parity between the currencies of the countries and the US dollar have been calculated according to the formula: PPP between country A’s currency with respect to the US dollar = price of a basket of goods in country A/ price of the same basket of goods in the USA = [ initial price (100) + inflation rate of cou
& O’Connell 2001) Therefore the PPP of country C with respect to the US dollar is as follows: Year PPP of country C with respect to US dollar 2003 1.02 2004 1.01 2005 1.01 2006 1.02 2007 1.01 The inflation rates for country D from 2003-2007 are as follows: (Mathis, Keat & O’Connell 2001) Therefore the PPP for country D with respect to the US dollar is: Year PPP of country D with respect to the US dollar 2003 0.99 2004 1.01 2005 0.98 2006 0.98 2007 0.99 Thus, these were the respective inflation rates of the countries A, B, C, D and their purchasing power parities calculated with respect ...
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