Suppose the U.S. dollar–pound sterling exchange rate is XXXXXXXXXXdollars per pound. Since the base year, inflation has been 5 percent in the United States and 7 percent in the United Kingdom. What is...

Suppose the U.S. dollar–pound sterling exchange rate is 1.2497 dollars per pound. Since the base year, inflation has been 5 percent in the United States and 7 percent in the United Kingdom. What is the real exchange rate? In real terms, has the dollar appreciated or depreciated against the pound?