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For the United States,suppose the Annual Interest Rate on Government

Question 33

Multiple Choice

For the United States,suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent.For Japan,suppose the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 7 percent.These variables would cause investment funds to flow from:


A) The United States to Japan,causing the dollar to depreciate
B) The United States to Japan,causing the dollar to appreciate
C) Japan to the United States,causing the yen to depreciate
D) Japan to the United States,causing the yen to appreciate

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