Problem
Suppose current price levels are P = $/good =100 in the US and P* = €/good = 150 in the EU. If the same goods are consumed in each country and there is free trade, what is the current exchange rate $/€? Five years later, P= 120 and P* = 160. What should the exchange rate be? Which currency has depreciated?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.