In the Spot Market,$1 Is Currently Equal to £0

question 55

Multiple Choice

In the spot market,$1 is currently equal to £0.6211.Assume the expected inflation rate in the U.K.is 2.6 percent while it is 4.3 percent in the U.S.What is the expected exchange rate four years from now if relative purchasing power parity exists?

• A)£0.5799
• B)£0.5822
• C)£0.6105
• D)£0.6623
• E)£0.6644

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Definitions:

Independent Treasury System

The Independent Treasury System, established in the 1840s, was a system where the U.S. government kept its funds in its own vaults rather than in banks, aiming for financial stability.

Constitutional Amendments

Changes or additions made to the United States Constitution, requiring a specific process for approval and ratification.

Checks And Balances

A fundamental principle of the United States Constitution that ensures no single branch of government becomes too powerful, with each branch having some measure of influence over the others.

Federalist Ideas

Political beliefs advocating for a strong central government, as proposed by figures like Alexander Hamilton, emphasizing the need for a consolidated federal authority.