Suppose a deposit in New York earns 6 percent a year and a deposit in London earns 4 percent a year. Interest rate parity holds if the
A) U.S. dollar appreciates by 2 percent a year.
B) U.S. dollar depreciates by 2 percent a year.
C) U.K. pound depreciates by 2 percent a year.
D) None of the above answers is correct because interest rate parity requires that the interest rates be the same in both countries.
B
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In the United States, who determines monetary policy? What is the major tool used to determine monetary policy?
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Using the expenditure approach, which of the following is added to consumption, investment, and government purchases to arrive at GDP?
a. The value of "free" household services provided by at-home spouses rather than a paid cook, maid, and baby sitter. b. The value of resale goods produced in the economy. c. The unpaid-for services provided by the natural environment, such as breathable air. d. The value of exports minus the value of imports.