​Assume that the U.S. and European nominal interest rates are equal. Then, the U.S. nominal interest rate decreases whil

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​Assume that the U.S. and European nominal interest rates are
equal. Then, the U.S. nominal interest rate decreases while the
European nominal interest rate remains stable. According to the
international Fisher effect, this implies expectations of ____ than
before, and that the Euro should ____ against the dollar.
a.
​lower U.S. inflation; depreciate
b.
​lower U.S. inflation; appreciate
c.
​higher U.S. inflation; depreciate
d.
​higher U.S. inflation; appreciate
The inflation rate in the US is 3% while the inflation rate in
Japan is 10%. The current exchange rate for the Japanese yen (¥) is
$0.0080. After supply and demand for the Japanese yen have adjusted
in the manner suggested by purchasing power parity, the new
exchange rate for the yen will be:
a.
​$0.0078.
b.
​$0.0074.
c.
​$0.0085.
d.
​$0.0070.
If nominal British interest rates are 9% and nominal U.S.
interest rates are 6%, then the British pound (£) is expected to
____ by about ____percent, according to the international Fisher
effect (IFE).
a.
depreciate; 2.9
b.
appreciate; 2.9
c.
depreciate; 1.0
d.
appreciate; 1.0
e.
None of these are correct.
) ​Turkish interest rates exceed US interest rates:
Assuming IFE holds, what will happen to TL?
a.
​will remain the same.
b.
​will depreciate against USD
c.
​ will appreciate against USD
) ​Turkish interest rates exceed US interest rates:
Assuming IFE holds, what will happen to TL?
a.
​will remain the same.
b.
​will depreciate against USD
c.
​ will appreciate against USD
) ​Turkish interest rates exceed US interest rates:
Assuming IFE holds, what will happen to TL?
a.
​will remain the same.
b.
​will depreciate against USD
c.
​ will appreciate against USD
) ​Turkish interest rates exceed US interest rates:
Assuming IFE holds, what will happen to TL?
a.
​will remain the same.
b.
​will depreciate against USD
c.
​ will appreciate against USD
​Turkish and Polish investors require a real return of 2%. If
the nominal Turkey interest rate is 17%, and the nominal Polish
rate is 13%, and IFE holds, the Polish inflation rate is expected
to be about ____ the U.S. inflation rate, and the Polish Zloty is
expected to ____.
a.
​2% above; depreciate by 2%
b.
​3% points above; depreciate by 3%
c.
​3% below; appreciate by 3%
d.
​3% points below; depreciate by 3%
e.
​ 4% points below; appreciate by 4%