Assume That the U

question 13

Multiple Choice

Assume that the U.S.has a 2 percent inflation rate while Sweden has a 7 percent inflation rate.According to relative PPP,the dollar would be expected to:

• A) Appreciate by 3.5 percent against the Swedish krona.
• B) Depreciate by 3.5 percent against the Swedish krona.
• C) Appreciate by 5 percent against the Swedish krona.
• D) Depreciate by 5 percent against the Swedish krona.