Econia Has a Lower Interest Rate Than Macroland

question 67

Multiple Choice

Econia has a lower interest rate than Macroland. According to economic theory, what would happen to achieve interest rate parity if an adjustment occurs naturally?

• A) Macroland's currency would appreciate.
• B) Macroland's currency would depreciate.
• C) Econia's interest rate would fall.
• D) Macroland's interest rate would rise.

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