If people expect relative PPP to hold,

A.the difference between the interest rates offered by dollar and euro deposits will equal the difference between the inflation rates expected, in the United States and Europe, over the relevant

B.the difference between the interest rates offered by dollar and euro deposits will equal the difference between the inflation rates expected in Europe and the United

C.the difference between the interest rates offered by dollar and euro deposits will equal the difference between the inflation rates expected, over the relevant horizon, in the United States and Europe, in the short run.

D.the difference between the interest rates offered by dollar and euro deposits will be above the difference between the inflation rates expected, over the relevant horizon, in the United States and Europe.

E.None of the above statements is true.

Answer: A