Which one of the following statements is INCORRECT? Select one: OA. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it appreciates. OB. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it depreciates. OC. The interest parity condition can be written as 0.20 = (1+0.06/1+0.06) x 0.20. OD. If the domestic interest rate decreases from 6% to 4%, It can be illustrated as follows: 6% 4% PRE R1-50.19 R1-S0 20
Which one of the following statements is INCORRECT? Select one: OA. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it appreciates. OB. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it depreciates. OC. The interest parity condition can be written as 0.20 = (1+0.06/1+0.06) x 0.20. OD. If the domestic interest rate decreases from 6% to 4%, It can be illustrated as follows: 6% 4% PRE R1-50.19 R1-S0 20
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter19: International Finance And The Foreign Exchange Market
Section: Chapter Questions
Problem 1CQ
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