Assume the current spot rate between the UK and the U.S.is £0.6058 per $1, the expected inflation rate in the U.S.is 2.2 percent, and the expected inflation rate in the UK is 3 percent.If relative purchasing power parity exists, what will the exchange rate be next year?
A) £.6389/$1
B) £.6106/$1
C) £.6223/$1
D) £.6022/$1
E) £.6336/$1
Correct Answer:
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