7.

Assume that capital is perfectly mobile and substitutable and that the interest rate in the United States and the European Union is currently 5%. Investors expect the euro to rise against the dollar by 2% and they thus demand a _____ in the _____.

a.	higher return equal to 7%; European Union
b.	lower return equal to 3%; United States
c.	lower return equal to 3%; United States
d.	higher return equal to 7%; United States