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One year ago the spot rate of US dollars for Canadian dollars was 1C1 Since that time the rate of inflation in the US has been 4 greater than that in Canada Based on the theory of Relative

One year ago the spot rate of U.S. dollars for Canadian dollars was $1/C$1. Since that time the rate of inflation 
in the U.S. has been 4% greater than that in Canada. Based on the theory of Relative PPP, the current spot exchange 
rate of U.S. dollars for Canadian dollars should be approximately ________.
A) $0.96/C$
B) $1/C$1
C) $1.04/C$1
D) Relative PPP provides no guide for this type of question

Apr 18 2021 View more View Less

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