Currently,you can exchange €100 for $125.The inflation rate in Europe is expected to be 2.5 percent.In one year,it is expected that €100 can be exchanged for $125.88.Assume relative purchasing power parity exists.What is the expected inflation rate in the U.S.?
A) 3.84 percent
B) 4.26 percent
C) 3.20 percent
D) 5.21 percent
E) 5.68 percent
Correct Answer:
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