In January 2012, one US dollar was worth 50.0 Indian rupees. Suppose that over the next year the value of the Indian rupee decreases to 59.0 Indian rupees to one US dollar. Suppose also that the price level of all goods and services in India, as measured in rupees, falls 17.0%, so that the Indian price index falls from a value of 100 to 83.0. At the same time, suppose that the US price level increases by 6%, to 106.
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