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
Chapter1: Making Economics Decisions
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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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