Suppose The Dollar Interest Rate And The Pound Sterling Interest Rate Are The Same, 3 Percent Per Year What Is The Relation Between The Current Equilibrium Dollar/Pound Exchange Rate And Its Expected Future Level? O A. Expected Dollar/Pound Exchange Rate Is Equal To The Current One. O B. Expected Dollar/Pound Exchange Rate Is Higher Than The Current One. C.

 

 

 

 

 

Suppose the dollar interest rate and the pound sterling interest rate are the same, 3 percent per year. What is the relation between the current equilibrium dollar/pound exchange rate and its expected future level? A. Expected dollar/pound exchange rate is equal to the current one. B. Expected dollar/pound exchange rate is higher than the current one. C. Expected dollar/pound exchange rate is lower than the current one. D. One cannot tell given the information above. Suppose the expected future exchange rate, $1.48 per pound, and the US interest rate remain constant, while Britain's interest rate rises to 6 percent per year. What is the new equilibrium dollar/pound exchange rate? New equilibrium exchange rate is $ per pound. (Enter your response to the nearest penny.)