Using the UIP equation, what would happen to the spot rate for euros if the interest rate on U.S dollars deposits rises ceteris paribus?

A) the spot rate for euros would rise
B) the spot rate for euros would fall
c) the spot rate for euros would be unchanged
d) all of the above could happen

Ans: B) the spot rate for euros would fall

Economics

You might also like to view...

Molly Sharp is producing a documentary about the plight of the six-toed ferrets of Sri Lanka. Molly has spent $125,000 of her own money on this project and the documentary is now complete

Molly just found out that no studio is willing to release her documentary and she must now shop it to cable television networks, where she knows she will not be able to recoup her investment. Which of the following statements regarding Molly Sharp's documentary is true? A) The $125,000 investment is an economic cost, and she will still make an accounting profit even if the television network willing to air her documentary pays her less than $125,000. B) She should not try to have her documentary aired on television because she cannot recoup her $125,000 investment. C) Since the $125,000 is a sunk cost, she should still try to have her documentary aired on television even though she will not see a profit. D) The $125,000 is a variable cost, so will not be incurred if she chooses not to have her documentary aired.

Economics

World Bank funds are largely acquired through interest earned on the deposits of member nations

a. True b. False Indicate whether the statement is true or false

Economics