Assume the the U.S. dollar and the Canadian dollar are initially in equilibrium. However the inflation rate in the U.S. is 2.5% and the inflation rate in Canada is 1%. The theory of purchasing power parity suggests which of the following is true?

	1.	We expect the USD to appreciate 1.5% relative to the CAD
	2.	We expect the USD to deppreciate 1.5% relative to the CAD
	3.	We expect the USD to appreciate 1.46% relative to the CAD
	4.	We expect the USD to deppreciate 1.46% relative to the CAD