Suppose that U.S. inflation is 3 percent and Turkish inflation is 70 percent. The effect of this discrepancy on the foreign exchange market is that
A) the Turkish currency will depreciate.
B) the dollar will depreciate.
C) it is impossible for interest rate parity to hold.
D) the Turkish currency will appreciate.
A
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Financial intermediaries are best described as:
a. informal institutions that provide funds to the government to manage budget deficits. b. institutions that accept deposits and make loans. c. institutions that control the money supply in the economy. d. institutions that provide financial aid to foreign countries. e. individuals who manage other's investment portfolios.
Will the national debt have to be paid off (i.e., reduced to zero) in the future? a. No, it can continually be refinanced
b. Yes, if it is not paid off, the U.S. Treasury will have to file for bankruptcy. c. No, technically, it is not a contractual obligation of the federal government. d. Yes, but since most of the debt is held by Federal Reserve Bank, its re-payment would merely involve an accounting transaction between the Fed and the Treasury.