$j spot exchange rate is $1.75/. The 1 year expected inflation rate is 1.6% in...
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$j spot exchange rate is $1.75/. The 1 year expected inflation rate is 1.6% in U.S., and 0.8% in Britain, respectively. All others being equal, if the actual (ex post) nominal exchange rate turns out to be $1.79/ after a year, what is the real rate of appreciation (or depreciation) of the base currency over this period? Select one: a. Dollar has a real appreciation of 0.8%. b. Dollar has a real depreciation of 0.8%. c. Pound has a real depreciation of 1.5%. d Pound has a real appreciation of 1.5%
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