Assume purchasing power parity holds now and in a year. Identical goods (with no transportation costs) today cost $700 (USD) in the United States and 4900 pesos (MXP) in Mexico. Over the next year, the Mexican economy experiences a 5% inflation rate and the U.S. economy experiences a 10% inflation rate. Which would be the expected exchange rate in 1 year after accounting for inflation.

a. 7:1

b. 7.33 :1

c. 10:1

d. 6.68:1