Respuesta :
Answer:
0.93%
Explanation:
Given that,
Current exchange rate for the Polish zloty = Z 2.85
Expected exchange rate in three years = Z 2.93
For determining the difference in the annual inflation rates, we can use relative purchasing power parity method which is as follows:
[tex]St=S0\times (\frac{1+Inflation\ (Poland)}{1+Inflation\ (US)})^{n}[/tex]
where,
St is the expected exchange rate = Z 2.93
S0 is the current exchange rate for the Polish zloty = Z 2.85
and,
n = time period = 3 years
By putting these values into the equation, we get
[tex]2.93=2.85\times [1+( inflation Poland - inflation US)^{3}][/tex] Â
[tex]\frac{2.93}{2.85}=[1 + (Inflation\ Poland - Inflation\ US)]^{3}[/tex]
Now,
(inflation Poland - inflation US) = [tex](\frac{2.93}{2.85})^{\frac{1}{3}}-1[/tex]
                          = 1.0093 - 1
                          = 0.0093 or 0.93%
Therefore, the difference in annual inflation rates  = 0.93%
