The Spot Exchange Rate of British Pound (£) Is $2

question 52

Multiple Choice

The spot exchange rate of British Pound (£) is $2.56(Canadian) /£.The annual inflation rate in Canadian $is 4% and 8% in Britain.What will be the anticipated exchange rate at the end of the year if PPP is valid?

• A)$2.4652/£
• B)$2.1503/£
• C)$3.0804/£
• D)$2.5600/£

---

Definitions:

Behavioralist Approach

A method in economics that uses psychological insights into human behavior to explain economic decision-making.

Legal Cartel Theory

A concept in economic theory suggesting that certain legal frameworks or conditions can enable firms to engage in cartel-like behavior without explicit agreements.

Sherman Act

A landmark federal statute in the field of United States antitrust law passed by Congress in 1890 to prohibit monopolistic business practices.