Assume that the spot quote ($/UK pound) is currently at $180. In three months, t

Question

Assume that the spot quote ($/UK pound) is currently at $180. In three months, the same spot rate is quoted at $1.60. If the change in the post rateis due entirely to inflation-rate differentials, which country had the relatively higher inflation rate?

Assume that the spot quote (S/UK pound) is currently at $1.80. In three months, the same spot rate is quoted at $1.60. If the change in the spot rate is due entirely to inflation-rate differentials, which country had the relatively higher inflation rate? a. US b. UK c. not enough information to give the correct answer d. they both had the same inflation rate

Explanation / Answer

The dollar has appreciated relative to the pound. so the inflation n UK was higher

b. UK

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