If the exchange rate regime is flexible, a decrease in the foreign interest rate willcause:the IP curve to shift to the left/upthe IP curve to become verticalthe IP curve to shift to the right/downa movement along the IP curvethe IP curve to become horizontal

The exchange rate is the price of one currency in respect to another..Exchange rates come in two…

the exchange rate regime is flexible, a decrease in the foreign interest rate will use: O the IP curve to shift to the left/up o the IP curve to become vertical o the IP curve to shift to the right/down O a movement along the IP curve O the IP curve to become horizontal

the exchange rate regime is flexible, a decrease in the foreign interest rate will use: O the IP curve to shift to the left/up o the IP curve to become vertical o the IP curve to shift to the right/down O a movement along the IP curve O the IP curve to become horizontal

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

If the exchange rate regime is flexible, a decrease in the foreign interest rate will
cause:
the IP curve to shift to the left/up
the IP curve to become vertical
the IP curve to shift to the right/down
a movement along the IP curve
the IP curve to become horizontal

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