If the USInterest Rate Differential Falls, Then the Exchange Rate ________

question 58

Multiple Choice

If the U.S.interest rate differential falls, then the exchange rate ________.

• A) definitely rises
• B) definitely falls
• C) does not change
• D) falls only if it was the U.S.interest rate that changed
• E) rises only if it was the foreign interest rate that changed

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Definitions:

Spanish Inquisition

The Spanish Inquisition was an institution that sought to enforce Catholic orthodoxy within Spain, famously through rigorous trials and persecutions from the late 15th to early 19th centuries.

Islamic Moors

Refers to the Muslim inhabitants of the Maghreb, the Iberian Peninsula, Sicily, and Malta during the Middle Ages.

Jews

An ethnoreligious group originating from the Israelites or Hebrews of the ancient Middle East, characterized by a common heritage, religion (Judaism), and culture.

Holy League

An alliance of Christian states formed at various times in history, often to oppose Muslim forces.