Recall that an exchange rate is the price of one currency in another. For example, it may take US $1.35 to buy 1 British Pound.Alsorecall the interest rates affect exchange rates. What do you predict will happen to the foreign exchange rate if interest rates in the United States increase more than in the UK? (In other words, which currency will become stronger?) How would such a change affect US exports to the UK? Would it be less expensive for an American tourist to take a vacation to London after the interest rate change? Be sure to clearly explain and justify your reasoning.

Please explain the following.

Realistically and thoroughly explains what might happen to the foreign exchange rate.

Makes realistic predictions about what might happen to US exports and explains why.

Realistically predicts what might happen to the price of a London vacation and explains why.

Organization and style of the essay.

Organization Grading Guidelines: Presentation is very effective and presented in a logical format with a clear beginning, middle and end. There is a clear statement of ideas and smooth transitions. The writer has stated the main idea clearly and has provided relevant details. The main idea is clearly conveyed in a presentation that is highly relevant and interesting. The student provides evidence of thoughtful input. Details are rich and appropriate. Spelling,punctuation,and capitalization are virtually always correct.