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    International Economics Study Set 9
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    Exam 15: Exchange Rates II: the Asset Approach in the Short Run
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    If UIP Holds, the Interest Rate at Home Is 4
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If UIP Holds, the Interest Rate at Home Is 4

Question 112

Question 112

Multiple Choice

If UIP holds, the interest rate at home is 4%, and the exchange rate is expected to depreciate by 3%, then the foreign interest rate is:


A) 1%.
B) 3%.
C) 7%.
D) 12%.

Correct Answer:

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