Under covered interest arbitrage

a. The currency of the country with higher short-term interest rates will experience an appreciation in its currency in the period ahead

b. The currency of the country with higher short-term interest rates will experience a depreciation in its currency in the period ahead

c. The cost of carry will discourage transactions in foreign exchange

d. Interest rates have nothing to do with exchange rate movements

When news about the economy points to weakness, actions taken by market participants anticipating policy actions by the central bank

a. Will help to stabilize the economy if the participants assess this information correctly

b. Will tend to push the economy off course if the participants assess the information incorrectly

c. Will be irrelevant to economic outcomes

d both a and b

Because of the financial crisis

		a. Aggregate demand plunged
		b. The level of the federal funds rate required to restore output to potential and to stabilize inflation was negative
		c. The Fed augmented a federal funds rate of zero with forward guidance and large-scale asset purchases
	d all of the above