Question: If the interest rate is expected to be 3% higher in Ireland than in the us a) the forecast of Ireland spot exchange rate should

If the interest rate is expected to be 3% higher in Ireland than in the us

a) the forecast of Ireland spot exchange rate should indicate appreciation by 3%

b) the spot exchange rate between the two countries should remain unchanged over the long run

c) the forecast of Ireland sport exchange rate should indicate depreciation by 3%

d) the theory of Purchasing Power Parity would predict a drop in nominal interest rate in Ireland of approximately 3%

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