Which would be the closest to the annual magnitude

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Problem 1: Suppose that the rate of inflation in New Zealand is 2.6%, and the rate of inflation in Canada is 8.2%. If the Canadian dollar is pegged to the New Zealand dollar, which of the following would be the closest to the annual magnitude of the real appreciation (+) or real depreciation (-) of the CAD relative to NZD?

a. -5.60%

b. +5.60%

c. There is insufficient information to answer this question.

d. +5.46%

e. -5.18%

Reference no: EM132753871

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