Assume the Current Spot Rate Between the UK and the U.S.is

question 31

Multiple Choice

Assume the current spot rate between the UK and the U.S.is £.6402 per $1.The expected inflation rate in the U.S.is 1.9 percent.The expected inflation rate in the UK is 2.1 percent.If relative purchasing power parity exists, what will the exchange rate be two years from now?

• A)£.6549/$1
• B)£.6404/$1
• C)£.6417/$1
• D)£.6382/$1
• E)£.6453/$1

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Definitions:

Savings

The concept in psychology referring to the amount of information or learned behavior that is retained and not forgotten over time.

Amnesia

A condition characterized by a partial or total loss of memory, typically caused by brain injury, disease, or psychological trauma.

Relearning

The process of learning material or information for a second time, typically more quickly than the original learning, due to some retention from the first learning experience.

Recognition

The identification of something as being seen, heard, or known previously.