Only typed answer Suppose the dollar interest rate and the pound sterling interest rate are the same, 5 percent per year. Suppose the expected future exchange rate, $1.89 per pound, and the US interest rate remain constant, while Britain's interest rate rises to 7 percent per year. What is the new equilibrium dollar/pound exchange rate? New equilibrium exchange rate is $ here per pound.

Only typed answer Suppose the dollar interest rate and the pound sterling interest rate are the same, 5 percent per year. Suppose the expected future exchange rate, $1.89 per pound, and the US interest rate remain constant, while Britain's interest rate rises to 7 percent per year. What is the new equilibrium dollar/pound exchange rate? New equilibrium exchange rate is $ here per pound.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 7PA

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Suppose the dollar interest rate and the pound sterling interest rate are the same, 5 percent per year.

Suppose the expected future exchange rate, $1.89 per pound, and the US interest rate remain constant, while Britain's interest rate rises to 7 percent per year. What is the new equilibrium dollar/pound exchange rate?

New equilibrium exchange rate is $ here per pound.

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