According to the interest-parity relation ... 1. a higher domestic interest rate leads to a depreciation of the nominal exchange rate. 2. a higher domestic interest rate leads to an appreciation of the nominal exchange rate. 3. the domestic interest rate has no impact on the nominal exchange rate. 4. a depreciation of the nominal exchange rate leads to a lower

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter2: International Flow Of Funds
Section: Chapter Questions
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According to the interest-parity relation ...

1. a higher domestic interest rate leads to a depreciation of the nominal exchange rate.

2. a higher domestic interest rate leads to an appreciation of the nominal exchange rate.

3. the domestic interest rate has no impact on the nominal exchange rate.

4. a depreciation of the nominal exchange rate leads to a lower domestic interest rate.

5. an appreciation of the nominal exchange rate leads to a higher domestic interest rate.

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