_____ on 1/1/06, the Direct Exchange Rate Was

Multiple Choice

_____ On 1/1/06, the direct exchange rate was $.60. On 12/31/06, the direct exchange rate was $.39. During 2001, the United States had 6% inflation, and the foreign country had 20% inflation. How much of the change in the exchange rate was the result of foreign inflation?

A) $.12
B) $(.12)
C) $.03
D) $(.03)
E) $(.14)