h. Suppose the ECB keeps the euro interest rate at 1% forever. The Fed now raises its interest rate from 1% to 6% for the coming year. After this event, what is the expected rate of dollar depreciation if UIP holds over the coming year? [Use the approximate UIP formula. I i. In the last question, suppose the policies are temporary, and everyone believes the exchange rate will revert to its expected long run PPP value of $1.26 per euro one year from now. What will be the spot exchange rate ($/] today? |Use the approximate UIP formula