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Suppose the domestic and foreign interest rates are both initially equal to 4%.Now suppose the foreign interest rate rises to 6%.Explain what effect this will have on the exchange rate.Also explain what must occur for the interest parity condition to be restored.
Standard Error
A measure of the accuracy with which a sample distribution represents a population by using the standard deviation of the sample.
Confidence Interval
A set of numbers, taken from sample-based statistics, that is probable to contain the estimated value of an unspecified population parameter.
Population Standard Deviation
A measure of the spread or dispersion of a set of data points in a population.
Sampling Error
The discrepancy between a sample statistic and the actual population parameter, which arises purely by chance from random sampling.
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