Assume That U

Assume that U.S. and British investors require a real return of 2%. If the nominal U.S. interest rate is 15%, and the nominal British rate is 13%, then according to the IFE, the British inflation rate is expected to be about ____ the U.S. inflation rate, and the British pound is expected to ____.

A) 2 percentage points above; depreciate by about 2%
B) 3 percentage points above; depreciate by about 3%
C) 3 percentage points below; appreciate by about 3%
D) 3 percentage points below; depreciate by about 3%
E) 2 percentage points below; appreciate by about 2%