It is announced today (time t) that the interest rate in Europe will be reduced by 1% for one period starting today (time t), and that it will increase back 1% a time t+1. If the interest rate in the USA remains unchanged at time t, what is the effect of the announcement on today's dollar-euro exchange rate (number of dollars per euro)? 

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The effect of the interest rate change announcement on todays dollareuro exchange rate depends on th... View the full answer