Other Things Constant, Which of the Following Will Most Likely

question 62

Multiple Choice

Other things constant, which of the following will most likely cause the dollar to appreciate on the exchange rate market?

• A) higher interest rates in the United States
• B) a relatively low rate of inflation in the United States
• C) high rates of income growth in Europe
• D) all of the above

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Definitions:

Compound Rate

The rate of interest used in calculating compound interest, typically applied over multiple compounding periods.

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit.

Compounded Semiannually

Interest that is computed and appended to the original amount semi-annually.

Effective Rate

The actual interest rate that an individual earns or pays on an investment, loan, or other financial product, after compounding and other factors are taken into account.