8. (3 points) If the U.S. inflation is 2% and the U.K. inflation is 3%, what can you infer from relative purchasing power parity (relative PPP) about the change in the exchange rate between the U.S. dollar and the British pound? a. the pound depreciates against the dollar by 1%. b. the pound appreciates against the dollar by 5%. c. the pound appreciates against the dollar by 1%. d. the pound depreciates against the dollar by 5%. 12. (3 points) Suppose the current spot exchange rate between the U.S. dollar and British pound is $1.8/ A European call option on pounds is expiring today. The call option has an exercise price of $1.75/ At the same time, a European put option on pounds is expiring today. The put option has an exercise price of $1.76/ Given the information above, which of the following is correct? a. both the call option and the put option are out-of-the-money. b. both the call option and the put option are in-the-money. c. the call option is in-the-money while the put option is out-of-the-money. d. the call option is out-of-the-money while the put option is in-the-money