Which one of the following statements is INCORRECT? Select one: would OA. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate be E=(1+0.04/1+0.06) x 0.20 = 0.19 and it appreciates. O B. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it depreciates. OC. The interest parity condition can be written as 0.20 = (1+0.06/1+0.06) x 0.20. OD. If the domestic interest rate decreases from 6% to 4%, it can be illustrated as follows: 6% 4% PRE 0 R1-50,19 R1-S0 20
Which one of the following statements is INCORRECT? Select one: would OA. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate be E=(1+0.04/1+0.06) x 0.20 = 0.19 and it appreciates. O B. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it depreciates. OC. The interest parity condition can be written as 0.20 = (1+0.06/1+0.06) x 0.20. OD. If the domestic interest rate decreases from 6% to 4%, it can be illustrated as follows: 6% 4% PRE 0 R1-50,19 R1-S0 20
Chapter29: International Finance
Section: Chapter Questions
Problem 8P
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