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The price of one unit of a consumer basket in the U.S. is USD 5.00 and GBP 4.00 in Great Britain. The spot exchange rate

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The price of one unit of a consumer basket in the U.S. is USD 5.00 and GBP 4.00 in Great Britain. The spot exchange rate is: Xo USD/GBP the one-year inflation rate for the U.S. is pUSD = 5% and for Great Britain is p GBP = 3.5%. According to APPP the intrinsic USD/GBP spot rate should be ______ ; However, according to today's spot FX rate, the GBP is currently relative to the USD. O 1.25; undervalued by 9.6% O 1.25; overvalued by 9.6% O 1.32; overvalued by 14.40% 1.32: undervalued by 14.40%

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