A fixed peg currency arrangement means that monetary authorities will approve any movement; the peg is national. a country's exchange rates fluctuate around a fixed rate within a narrow band. allied nations' currencies will move in opposition, creating a balance. currency relationships are under the control of the central bank. Question 6 (2.5 points) The real interest rate is the nominal rate plus the expected inflation rate. is the nominal rate minus the expected Inflation rate. is the prime rate minus the inflation rate is used to calculate PPP. Question 1 (2.5 points) Exchange rate forecasting is unimportant because exchange rate forecasting does not have a theoretical model. unimportant because you can't predict exchange rate movements. important because exchange rates influence many aspects of business. important because markets depend on solid information and not estimates