Suppose That the Current Spot Exchange Rate of Canadian Dollars

Multiple Choice

Suppose that the current spot exchange rate of Canadian dollars for Russian rubles is $0.15/1ruble. The price of Russian-produced goods increases by 8 percent, and the Canadian price index increases by 3 percent. According to PPP, the 8 percent rise in the price of Russian goods relative to the 3 percent rise in the price of Canadian goods results in a(n)

A) depreciation of the Russian ruble by 5 percent.
B) depreciation of the Russian ruble by 6 percent.
C) appreciation of the Russian ruble by 5 percent.
D) appreciation of the Russian ruble by 6 percent.
E) depreciation of the Russian ruble by 7 percent.