Which one of the following statements is INCORRECT? Select one: OA. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it appreciates. OB. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it depreciates. OC. The interest parity condition can be written as 0.20 = (1+0.06/1+0.06) x 0.20. OD. If the domestic interest rate decreases from 6% to 4%, It can be illustrated as follows: 6% 4% PRE R1-50.19 R1-S0 20
Which one of the following statements is INCORRECT? Select one: OA. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it appreciates. OB. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it depreciates. OC. The interest parity condition can be written as 0.20 = (1+0.06/1+0.06) x 0.20. OD. If the domestic interest rate decreases from 6% to 4%, It can be illustrated as follows: 6% 4% PRE R1-50.19 R1-S0 20
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter19: International Finance And The Foreign Exchange Market
Section: Chapter Questions
Problem 1CQ
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Give explanation steps and take like
![Which one of the following statements is INCORRECT?
Select one:
OA. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would
be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it appreciates.
OB. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would
be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it depreciates.
OC. The interest parity condition can be written as 0.20 = (1+0.06/1+0.06) x 0.20.
OD. If the domestic interest rate decreases from 6% to 4%, It can be illustrated as follows:
6%
4%
PRE
R1-50.19 R1-S0 20](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6aac3ad0-e2ad-45c9-991f-60ecae6d3966%2Fc0bac170-2db0-4f35-aaa7-d86a54ab4ac9%2Fzxb0a30s_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Which one of the following statements is INCORRECT?
Select one:
OA. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would
be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it appreciates.
OB. If the domestic interest rate decreases from 6% to 4%, the nominal exchange rate would
be E = (1+0.04/1+0.06) x 0.20 = 0.19 and it depreciates.
OC. The interest parity condition can be written as 0.20 = (1+0.06/1+0.06) x 0.20.
OD. If the domestic interest rate decreases from 6% to 4%, It can be illustrated as follows:
6%
4%
PRE
R1-50.19 R1-S0 20
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