​The Following Regression Analysis Was Conducted for the Inflation Rate

Multiple Choice

​The following regression analysis was conducted for the inflation rate information and exchange rate of the British pound: Regression results indicate that a₀ = 0 and a₁ = 1. Therefore:

A) ​purchasing power parity holds.
B) ​purchasing power parity overestimated the exchange rate change during the period under examination.
C) ​purchasing power parity underestimated the exchange rate change during the period under examination.
D) ​purchasing power parity will overestimate the exchange rate change of the British pound in the future.