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Consider the economic change listed along the top row of the following table. In the empty boxes, indicate the effect of the change (+ for
Consider the economic change listed along the top row of the following table. In the empty boxes, indicate the effect of the change (+ for positive, - for negative, ? for unclear effect). Use the interest rate parity model to determine the answers (You need to write the interest rate parity model first).
| A Increasing in Next Years Expected Dollar Value |
RoR on U.S. Assets |
|
RoR on Euro Assets |
|
Demand for U.S. Dollars on the Forex |
|
Demand for Euros on the Forex |
|
U.S. Dollar Value |
|
Euro Value |
|
E$/ |
|
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