Question
A) Assume the current spot rate between the UK and the U.S. is 0.83 per $1, the expected inflation rate in the U.S. is 2.94
A) Assume the current spot rate between the UK and the U.S. is 0.83 per $1, the expected inflation rate in the U.S. is 2.94 percent, and the expected inflation rate in the UK is 4.51 percent. If relative purchasing power parity exists, what will the exchange rate be 5 years from now? Round to 4 decimal points
B) Assume the current spot rate between the UK and the U.S. is 0.802 per $1, the expected inflation rate in the U.S. is 2.88 percent, and the expected inflation rate in the UK is 3.63 percent. If relative purchasing power parity exists, what will the exchange rate be next year? Round to 4 decimal points
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