Assume an Equilibrium State in Which European Inflation and U

Assume an equilibrium state in which European inflation and U.S. inflation are both 4 percent. If U.S. inflation suddenly decreased to 2 percent, the euro will ____ against the dollar by approximately ____ percent, according to purchasing power parity.

A) appreciate; 2
B) depreciate; 2
C) appreciate; 4
D) depreciate; 4
E) none of the above