In the Spot Market, $1 Is Currently Equal To $\le$ 05086 the Expected Inflation Rate in the U

question 18

Multiple Choice

In the spot market, $1 is currently equal to $\le$ 0.5086. The expected inflation rate in the U.K. is 5 % and in the U.S. 4 %. What is the expected exchange rate one year from now if relative purchasing power parity exists?

• A) \(\le\).5035
• B) \(\le\).5077
• C) \(\le\).5109
• D) \(\le\).5121
• E) \(\le\).5137

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