If the 2005 Inflation Rate in Britain Is 6 Percent,and

Multiple Choice

If the 2005 inflation rate in Britain is 6 percent,and the inflation rate in the U.S.is 4 percent,then the theory of purchasing power parity predicts that,during 2005,the value of the British pound in terms of U.S.dollars will

A) rise by 10 percent.
B) rise by 2 percent.
C) fall by 10 percent.
D) fall by 2 percent.
E) do none of the above.