Interest rates are 10% in the U.S. Interest rates are 8% in Europe. You observe me investing in Europe, foregoing the higher interest rate in the U.S. What can you infer about what I am expecting the to do over this next year?

Doug is expecting the Euro to _____________ by at least ________ %

5. At the start of the year, the exchange rate was $1.25/. At the end of the year, the exchange rate is $1.28/. If U.S. inflation was 8% and European inflation was 4%, what has been the nominal and real change in the value of the Euro (versus the USD)?

Nominal: _____________% (to 2 decimal places like 5.29%)

Real: _____________% (to 2 decimal places like 5.29%)