An advantage of a fixed exchange rate system is that governments are not required to constantly intervene in the foreign exchange market to maintain exchange rates within specified boundaries.

True

False

If home currency interest rate is 12%, foreign currency interest rate is 9%, inflation rate in home country 8% and inflation rate in foreign country 5% then the expected change in spot rate using Purchasing Power Parity is:

2.752%

2.679%

2.778%

2.857%