If a country experiences an increase in interest rates relative to U.S. interest rates, the inflow of

Fantastic news! We've Found the answer you've been seeking!

Question:

If a country experiences an increase in interest rates relative to U.S. interest rates, the inflow of U.S. funds to purchase its securities should ____, the outflow of its funds to purchase U.S. securities should ____, and there is ____ pressure on its currency's equilibrium value. A. increase; decrease; downward B. increase; decrease; upward C. decrease; increase; downward D. increase; increase; upward

Assume that the interest rate offered on pounds is 5 percent and the pound is expected to depreciate by 1.5 percent against the home currency. For the international Fisher effect (IFE) to hold between the United Kingdom and the home country, the home interest rate should be ____.

A. 3.43 percent

B. 5.68 percent

C. 6.50 percent

D. 7.30 percent