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6. The annual inflation rate is 5.5 percent in the U.S. and 4 percent in Britain. Assume that PPP held initially. Over the course of

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6. The annual inflation rate is 5.5 percent in the U.S. and 4 percent in Britain. Assume that PPP held initially. Over the course of the year the dollar depreciates against the GBP by 3 percent. At the end of the year what is the real exchange rate, g? a. 0.894 b. 0.984 c. 0.997 d. 0.999 e. 1.000

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