The Current Spot Rate Between the UK and the U

question 76

Multiple Choice

The current spot rate between the UK and the U.S.is £0.6528 per $1.The expected inflation rate in the U.S.is 1.8 percent.The expected inflation rate in the UK is 3.4 percent.If relative purchasing power parity exists,what will the exchange rate be two years from now?

• A)£0.6549/$1
• B)£.0.6632/$1
• C)£.0.6739/$1
• D)£0.6982/$1
• E)£0.5331/$1

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