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Assume that interest rate parity holds, and the euro's interest rate is 9 percent while the U.S. interest rate is 12 percent. Then the euro's interest rate increases to 11 percent while the U.S. interest rate remains the same. As a result of the increase in the interest rate on euros, the euro's forward ____ will ____ in order to maintain interest rate parity.
Primary Stimulus
The initial or main source of stimulation that elicits a response in sensory, behavioral, or cognitive processes.
Secondary Stimulus
A stimulus that acquires the capacity to evoke a conditioned response after being paired with a primary stimulus.
Acquisition
The process of learning or obtaining new information, skills, or responses, as in the initial stage of conditioning in psychology.
Electric Shock
A sudden discharge of electricity through a part of the body, causing injury or involuntary muscle contraction.
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