If inflation in the United States averages more than inflation in the euro area over a long period of time, we should expect:
A. the dollar to depreciate relative to the euro.
B. the dollar to appreciate relative to the euro.
C. the euro/U.S. dollar exchange rate to fluctuate in a narrow range set by the European Central Bank.
D. no effect; there isn't a link between inflation and exchange rates over the long run.
Answer: A
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