Relative purchasing power parity-inflation rate

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Reference no: EM13934346

Currently, you can exchange $1 for £0.53. Assume that the average inflation rate in the U.S. over the next four years will be 4% annually as compared to 5% in the U.K. Based on relative purchasing power parity, you should expect the _____ over the next 4 years.

a. both the U.S. dollar and the British pound to appreciate against all other currencies

b. British pound to appreciate against the U.S. dollar

c. U.S. dollar to appreciate against all currencies

d. U.S. dollar to appreciate against the British pound

e. British pound to appreciate against all currencies

Reference no: EM13934346

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