Assume that you are studying exchange rates between USA and Colombia. Assume that the equilibrium exchange rate in Colom

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answerhappygod
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Assume that you are studying exchange rates between USA and Colombia. Assume that the equilibrium exchange rate in Colom

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Assume that you are studying exchange rates between USA andColombia. Assume that the equilibrium exchange rate in Colombia is0.3 pesos per USA shilling. Now suppose that the real interestrate rises in Colombia. Which of the following choices shows achange we would expect to see in the Colombian forex market?
The demand for USA shilling would rise, leading to adepreciation of the Colombian pesos.
The demand for Colombian pesos would increase leading todepreciation of the USA dollars.
The supply of USA shilling would fall leading to an appreciationof the Colombian pesos.
The supply of USA shilling would rise leading to an appreciationof the Colombian pesos.
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