Question: The interest rate in the U.K. is 3%, while the interest rate in the U.S. is 5%. The spot rate for the British pound is

The interest rate in the U.K. is 3%, while the interest rate in the U.S. is 5%. The spot rate for the British pound is $1.50. According to the international Fisher effect (IFE), the British pound should adjust to a new level of:

		$1.47.
		$1.53.
		$1.43.
		$1.57.

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