Question
Suppose we expect the British Central Bank to decrease interest rates.Then using our models of exchange rate determination, we would expect that: A. a US
Suppose we expect the British Central Bank to decrease interest rates.Then using our models of exchange rate determination, we would expect that:
A. a US business located in Great Britain that was interested in repatriating its profits (i.e., switching s back to $s) should do it now rather than later.
B. a speculator could make money by purchasing s now and selling them back later.
C. this would cause an increase in the demand for the .
D. a speculator could make money by selling $ now and buying them back later.
E. this would cause the expected return on holding denominated assets to increase.
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