We know that several factors affect the exchange rate. And many of the factors change ay once and so sometimes it is not possible to predict the impact on exchange rates. For each of the following combinations of factors, state whether it is possible to predict the direction of the effect on the domestic exchange rate. For the cases where it is possible to predict the direction of effect, state what that direction is.

a)The domestic interest rate rises, foreign interest rate falls, and expected import demand falls as well.

b)The domestic price level rises, quotas are placed on imports, and productivity is expected to rise.

c)Export demand is expected to rise, the domestic price level is expected to fall, and foreign interest rates are expected to fall as well.