If the domestic dollar return (home nominal interest rate) is 5%, and the foreign nominal interest rate is 3%, and there is no expected change in future exchange rates, then as the spot exchange rate depreciates:
a. the foreign return rises.
b. the foreign return falls.
c. the domestic return rises.
d. the domestic return falls.
Ans: b. the foreign return falls.
Economics
You might also like to view...
"If the marginal product of labor curve slopes downward, then the average product of labor curve necessarily must slope downward." Explain whether the previous statement is correct or incorrect?
What will be an ideal response?
Economics
How has economist Robert Fogel explained that economic growth is connected to life expectancy? Based on this connection, in what country would you expect to have a longer life expectancy, the United States or India? Explain
What will be an ideal response?
Economics