In the real world where relative PPP fails to hold, suppose that U$.$S$.$ inflation is expected to exceed European inflation $({}_{US}^e-{}_E^e)$ by $6$ percent for the foreseeable future. Furthermore, suppose that

output demand and supply trends are widely expected to cause the dollar to decline against the euro in real terms at a rate of $1$ percent per year. In this case, the international interest rate spread

$(R_{\text{\$}}-R_{})$ will actually be

A$.-5$ percent.

B$.5$ percent.

C$.7$ percent.

D$.$ indeterminate, since expectations are unreliable.