If the Rate of Inflation in the United States Is

question 25

Multiple Choice

If the rate of inflation in the United States is 4% and the rate of inflation in the United Kingdom is 3%,relative purchasing power would predict that

• A) the pound will appreciate relative to the dollar.
• B) the pound will depreciate relative to the dollar.
• C) both the dollar and the pound will depreciate due to inflation.
• D) both the dollar and the pound will appreciate due to inflation.

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Definitions:

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