If the UK Price Level Is Increasing by 3 Per

question 23

Multiple Choice

If the UK price level is increasing by 3 per cent annually and the Swiss price level is increasing by 5 per cent annually, by what percentage would the pound sterling price of Swiss francs need to change according to purchasing power parity?

• A) depreciate by 5 per cent per year
• B) appreciate by 3 per cent per year
• C) appreciate by 5 per cent per year
• D) depreciate by 2 per cent per year

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