Multiple Choice
Assume that the one-year interest rate in the United States is 7 percent and in the United Kingdom is 5 percent. According to the international Fisher effect, the British pound's spot exchange rate should ____ by about ____ over the year.
A) depreciate; 1.9 percent
B) appreciate; 1.9 percent
C) depreciate; 3.94 percent
D) appreciate; 3.94 percent
Correct Answer:
Verified
Correct Answer:
Verified
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