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Questions 35-39 are based on the following information: In October 2013, there is a consensus in the capital market that the annual inflation rate is
Questions 35-39 are based on the following information: In October 2013, there is a consensus in the capital market that the annual inflation rate is likely to be 3.5% in US and 1.5% in China for the next two years. Based on this information, answer the following questions regarding your prediction on the foreign exchange rate. You would expect [I1] (US or China?) to have a higher interest rate according to parity relations. (2 points) US China
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