If the US and Japan Engage in Substantial Financial Flows but Little

Multiple Choice

If the U.S. and Japan engage in substantial financial flows but little trade, ____ directly influences their exchange rate the most. If the U.S. and Switzerland engage in much trade but little financial flows, ____ directly influences their exchange rate the most.

A) interest rate differentials; interest rate differentials
B) inflation and interest rate differentials; interest rate differentials
C) income and interest rate differentials; inflation differentials
D) interest rate differentials; inflation and income differentials
E) inflation and income differentials; interest rate differentials