If people expect relative PPP to hold
A) the difference between the interest rates offered by dollar and euro deposits will equal the difference between the inflation rates expected, in the United States and Europe, respectively, over the relevant horizon.
B) the difference between the interest rates offered by dollar and euro deposits will equal the difference between the inflation rates expected in Europe and the United States, respectively.
C) the difference between the interest rates offered by dollar and euro deposits will equal the difference between the inflation rates expected, over the relevant horizon, in the United States and Europe, respectively, in the short run.
D) the difference between the interest rates offered by dollar and euro deposits will be above the difference between the inflation rates expected, over the relevant horizon, in the United States and Europe, respectively.
E) the difference between the interest rates offered by dollar and euro deposits will be below the difference between the inflation rates expected, over the relevant horizon, in the United States and Europe, respectively.
A
You might also like to view...
The figure above shows the market for tires. According to the figure, the government collects ________ per month in total tax revenue
A) $600 million B) $1,200 million C) $2,000 million D) $900 million E) None of the above answers is correct.
A Pigouvian subsidy leads to a socially efficient outcome by ________
A) raising individuals' marginal benefit from consumption B) lowering the marginal private cost of production C) raising the marginal external benefit from consumption D) lowering the marginal external cost of production