If the domestic interest rate decreases, with the foreign interest rate and the expected future spot rate remaining unchanged, the value of the domestic currency vis-à-vis the foreign currency is expected to:
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- 7. If the expected future spot exchange rate value of the foreign currency decreases, with the interest rate differential unchanged, the current spot exchange rate value of the domestic currency:
- The price of one country's currency in units of another currency or commodity is the ________. A: foreign interest rate B: foreign currency exchange rate C: par value D: international rate
- What would the foreign interest rate need to be to achieve interest rate parity if the domestic interest rate is 5%, the forward rate is 1.48 and the spot rate is 1.5? A: 6% B: 8% C: 7% D: 2%
- If the forward exchange rate, defined as the domestic currency price<br/>of the foreign currency, is smaller than the spot exchange rate,<br/>there is a ( ). A: forward premium on the foreign currency. B: forward discount on the foreign currency. C: shortage of dollars. D: surplus of dollars.
- The relationship among real interest rate, nominal interest rate, and expected inflation rate is _________. A: real interest rate = nominal interest rate+ expected inflation rate B: real interest rate = nominal interest rate- expected inflation rate C: real interest rate = expected inflation rate - nominal interest rate D: nominal interest rate = real interest rate - expected inflation rate