Assume the spot rate of $1 is £.7347.Also assume the expected inflation rate in the U.K.is 2.1 percent while the U.S.inflation rate is 3.6 percent.What is the expected exchange rate three years from now if relative purchasing power parity exists?
A) £.7237
B) £.6306
C) £.7683
D) £.7021
E) £.7667
Correct Answer:
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