Question: A decrease in the expected exchange rate E$ / e causes: Question 1 Answer a . no change in the spot exchange rate. b .

A decrease in the expected exchange rate E$/e causes:
Question 1Answer
a.
no change in the spot exchange rate.
b.
an increase in the rate of return on pound in the short run.
c.
an increase in the rate of return on dollar in the short run.
d.
a decrease in the rate of return on pound in the long run.
e.
a pound depreciation and a dollar appreciation.

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