Please answer question 4 ~ 6

Suppose that dollar and euro 1-month interest rates are equal at 5%. The current spot rate is 1$/euro. What is the one month forward rate according to the covered interest parity ? 1$/euro 0.95$/euro 1.05$/euro None of the above Suppose the dollar-euro spot rate closed yesterday at 1 $/euro. The economy was in a long-run equilibrium where PPP holds. Eurozone and US interest rates are equal at 7%. Inflation in the euro area is 2%. Inflation in the U.S. had also been 2%, but news today predicts next years inflation will be 4%. Assume that PPP holds (only) in the long run (one year from today), what will be the market's expected exchange rate one-year from today? 1 $/euro 1.02 $/euro 1.04 $/euro 0.96 $/euro Continue from the previous question. Assume that UIP holds. What will today's spot rate be after the news about inflation assuming no changes in interest rates? 1 $/euro 1.02 $/euro 1.04 $/euro 0.96 $/euro Continue from the question 2. Now assume that the Fed raises interest rates in response to inflation. That is, for every percentage point of inflation over 2%, the Fed raises interest rates by 1.5%. What will today's spot rate be (assume that expected inflation remains at 4%). 0.99 $/euro 1 $/euro 1.02 $/euro 1.04 $/euro From the previous question, what is the short-run relationship between inflation and the nominal exchange rate when Fed policy is factored in: Higher inflation leads to depreciation Ambiguous relationship-it depends on extend of the Fed's response Higher inflation leads to appreciation Consider a country that has inflation of 10 percent per year. Real output growth is 2 percent. If velocity of money is constant, what is the money supply growth rate? 2% 8% 10% 12%