Multiple Choice
Suppose the interest rate in England is 5% and the interest rate in France is 7%. If the euro, France's currency, is expected to depreciate by 3% against the British pound
A) the euro-pound exchange rate will change as people will invest in other countries, such as the United States.
B) there will be no flow of funds from England to France because of the exchange rate uncertainty.
C) funds will flow from England to France.
D) funds will flow from France to England.
Correct Answer:
Verified
Correct Answer:
Verified
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