Question

Suppose the current exchange rate for the Polish zloty is Z 3.91. The expected exchange rate in three years is Z 3.98. What is the difference in the annual inflation rates for the United States and Poland over this period

Answer 1

1.79%

Step-by-step explanation:

Calculation to determine the difference in the annual inflation rates for the United States and Poland over this period

Current exchange rate for Polish Zioty = Z 3.91/ US dollars

Expected exchange rate in 3 years for Polish Zioty = Z 3.98/ US Dollars

Now let determine the difference in the annual inflation rates

Annual inflation rates= ( 3.98– 3.91)/ 3.91 x 100

Annual inflation rates= 0.06/3.91x 100

Annual inflation rates=1.79 %

Therefore the difference in the annual inflation rates for the United States and Poland over this period is 1.79%