In Equilibrium, Interest Rates Adjust So That the Nominal U

question 113

Multiple Choice

In equilibrium, interest rates adjust so that the nominal U.S. interest rate is equal to the

• A)foreign nominal interest rate minus the expected change in the exchange rate.
• B)foreign nominal interest rate plus the expected change in the exchange rate.
• C)foreign real interest rate that has been adjusted for expected changes in prices.
• D)foreign real interest rate plus the exchange rate risk.

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Definitions:

Sequencing

The arrangement of objects, tasks, or events in a particular order or sequence.

Ethical

Being ethical involves adhering to accepted principles of right and wrong that govern the conduct of a profession or the individual.

Deliberate Machiavellianism

The strategic and sometimes manipulative behavior aimed at achieving personal or organizational goals by whatever means necessary, often without regard for ethics or morality.

Upward Appeal

A means of influence in which the leader enlists a person with more formal authority to do the influencing.