Question: CORRECT ANSWER IS THERE. JUST NEED HELP ON HOW TO GET THE ANSWER. THANK YOU 4) Assume that the 1-year inflation rate in UK is

CORRECT ANSWER IS THERE. JUST NEED HELP ON HOW TO GET

CORRECT ANSWER IS THERE. JUST NEED HELP ON HOW TO GET THE ANSWER.

THANK YOU

4) Assume that the 1-year inflation rate in UK is 3.00%, while the 1-year inflation rate in the U.S. is 5.00%. If the Purchasing Power Parity holds, the UK Pound is expected to against the USD. Ans: Strengthen (appreciate) 5) Assume that the 1-year interest rate in UK is 6.00\%, while the 1-year interest rate in the U.S. is 4.00%. The current spot rate is Pound 0.8/$. If the International Fisher Effect (IFE) holds, the UK Pound/\$ exchange rate in about a year's time will be Ans: Pound 0.8154/$ 6) Assume that the 1-year interest rate in UK is 6.00%, while the 1-year interest rate in the U.S. is 4.00\%. If the International Fisher Effect (IFE) holds, the UK Pound is expected to against the USD. Ans: Weaken (depreciate)

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