Considering the Theory of Purchasing Power Parity, If Inflation in Mexico

Multiple Choice

Considering the theory of purchasing power parity, if inflation in Mexico is 5% while prices in the U.S.are stable; we should expect:

A) The dollar to appreciate 5% relative to the peso
B) The peso to appreciate 5% relative to the dollar
C) The nominal exchange rate to stay fixed
D) The real exchange rate of U.S.goods / Mexican goods to appreciate 5%