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If interest rates in the Euro-area are 2% and inflation is 2% whilst in the...

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Finance

If interest rates in the Euro-area are 2% and inflation is 2% whilst in the USA interest rates are 1% and inflation is 1% then uncovered interest rate parity predicts that

Select one:
a.
the euro should appreciate against the dollar in real terms by 2%
b.
the euro should appreciate against the dollar in real terms by 1%
c.
the dollar should appreciate against the euro in real terms by 2%
d.
the dollar should appreciate against the euro in real terms by 1%
e.
The euro should remain unchanged against the dollar in real terms

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