10. In chapter 4, we covered monetary approach to exchange rates, our finding showed a positive relationship between interest rates and exchange rates.(i.e. As interest rates increase, aggregate money demand will decrease. The exchange rates will increase as well.) However, in chapter 2&3, due to the asset approach, we found the opposite results. (i.e. As interest rates increase, through arbitrage activities, the exchange rates will decrease.) (1) Do you believe it is a paradox or not? (5%) (2) Can you comprehend why these findings are the opposite? (5%) 10. In chapter 4, we covered monetary approach to exchange rates, our finding showed a positive relationship between interest rates and exchange rates.(i.e. As interest rates increase, aggregate money demand will decrease. The exchange rates will increase as well.) However, in chapter 2&3, due to the asset approach, we found the opposite results. (i.e. As interest rates increase, through arbitrage activities, the exchange rates will decrease.) (1) Do you believe it is a paradox or not? (5%) (2) Can you comprehend why these findings are the opposite? (5%)