If, in Time Period #1, the Equilibrium Value of the Pound

Multiple Choice

If, in time period #1, the equilibrium value of the pound is $1.60, but then U.K. prices double between time period #1 and time period #2 while U.S. prices rise by 60 percent, then the (relative) purchasing power parity theory would say that the equilibrium value of the pound in time period #2 is

A) $0.80.
B) $1.25.
C) $1.28.
D) $2.00