During the Period Between 1980 and 2010, a Comparison of Interest

question 100

Multiple Choice

During the period between 1980 and 2010, a comparison of interest rate differential between the U.S. and the United Kingdom against their exchange rate suggest that

• A)when the U.S.interest rate was relatively higher, the dollar depreciated.
• B)when the U.S.interest rate was relatively lower, the dollar depreciated.
• C)the interest rate differential and exchange rate are positively related half the time and negatively related the other half of the time.
• D)both the interest rate differential and exchange rate were very steady over the entire period.
• E)there is no relationship between changes in the interest rate differential and the exchange rate.

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Definitions:

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