Question: Please answer C Question 2 a. (10 points) Suppose that the South African interest rate is 4% and the U.S. interest rate is 6%. If

Please answer C

Question 2 a. (10 points) Suppose that the South African interest rate is 4% and the U.S. interest rate is 6%. If the expected future spot exchange rate one year from now is F Fmas =6.05 Rand per dollar and uncovered intetest rate parity holds, what must the current spot exchange rate be in order to clear the foreign exchange market? b. (10 points) Suppose that the expected future spot rate is 6.25 rather than 6.05. How does that alter the equilibrium exchange rate you calculated in part (a)? c. (10 points) Using the expected exchange rate from part (b), explain what would happen if the South African interent rate happened to be 6.7%. Can your answer to part b also be the answer to this question? Explain

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