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Consider a case were the growth rate of the money supply in the US is 6% per year, the growth rate of the money supply
Consider a case were the growth rate of the money supply in the US is 6% per year, the growth rate of the money supply in the UK is 4% per year, and real GDP growth in the US is 2 percentage point lower per year than in the UK.
Using the quantity theory of money (and inflation) with constant velocity and assuming that the law of one price holds in the long run, calculate the annual percentage change ofE(expressed in Pounds per Dollar).
Note: Include a (-) sign if the growth rate is negative.
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