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.Also,recall the interest rates affect exchange rates.

(A) What do you predict will happen to the foreign exchange rate if interest rates in the United States increased more than in the UK? (In other words, which currency will become stronger?)

(B) How would such a change affect US exports to the UK?

(C) 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.