Suppose that on January 1, 2015, the spot exchange rate between the Canadian dollar and the US dollar was US$1= CA$1.19. On December 31, 2015, the spot exchange rate was US$1= CA$1.39. Over the year 2015, the Canadian inflation rate was 1.85% and the US inflation rate was 0.73%. Use the relative PPP as a standard,

Select all that apply:

a.The Canadian dollar appear to be overvalued against USD on December 31, 2015.

b. The Canadian dollar appear to be undervalued against USD on December 31, 2015.

c.The Canadian dollar appear to be at the relative PPP level against USD on December 31, 2015.

d.Not enough information to decide if the Canadian dollar is over-valued or under-valued.

e.

None of the above.