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Given the following information, what is the (approximate) rate of change in the exchange rate (e) between (GBP) and (JPY) according to the Purchasing Power

Given the following information, what is the (approximate) rate of change in the exchange rate (e) between (GBP) and (JPY) according to the Purchasing Power Parity?

Real interest rate in UK and Japan

2%

Inflation in UK

4%

Nominal interest rate in Japan

3%

Spot rate

200/

a) JPY appreciates by 3.0196%.

b) No change since the real interest rates are same

c) GBP depreciates by 3.08%.

d) JPY appreciates by 3.08%.

e) GBP appreciates by 3.0196%.

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