Suppose that the UK's real interest rate increases relative to the interest rate in the U.S. 1. Other things being equal

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Suppose That The Uk S Real Interest Rate Increases Relative To The Interest Rate In The U S 1 Other Things Being Equal 1 (39.84 KiB) Viewed 33 times

Suppose that the UK's real interest rate increases relative to the interest rate in the U.S. 1. Other things being equal, how should this affect the equilibrium value of the U.S dollar. Do you expect the U.S dollar to appreciate or depreciate as a result of these changes. Why? Answer the question using the demand and supply model. Be sure to explain which curve shifted and why. 2. if you are a manager of a UK business that imports from the U.S, and you expect the equilibrium volue of the U.S dollar to change according to the answer in item 1, what can you do to hedge your import business? Be specific, show all your work and explain your reasoning. Your explanation determines your grade.