The spot exchange rate for the British pound is USD1.60 = GBP1.The annual inflation rate in the U.S.is 4% compared with 8% in the U.K.What is the anticipated exchange rate at the end of the year if purchasing power parity is valid?
A) USD1.54 = GBP1
B) USD1.65 = GBP1
C) USD1.60 = GBP1
D) USD1.63 = GBP1
Correct Answer:
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