Question
Which of the following are TRUE regarding international Fisher effect (IFE)? I The IFE states that the spot exchange rate should change in an amount
Which of the following are TRUE regarding international Fisher effect (IFE)?
I The IFE states that the spot exchange rate should change in an amount equal to but in the opposite direction of the difference in interest rates between countries.
II The IFE describes that currency of country with higher rate of interest should depreciate against currency of country with lower rate of interest in equal proportion to the difference between the rates of interest.
III The IFE links the exchange rate with the interest rates between countries.
Select one: a. I, and II only b. I, and III only c. II, and III only d. I, II, III
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