Assume That U

question 21

Multiple Choice

Assume that U.S. and British investors require a real return of 2%. If the nominal U.S. interest rate is 15%, and the nominal British rate is 13%, then according to the IFE, the British inflation rate is expected to be about ____ the U.S. inflation rate, and the British pound is expected to ____.

• A) 2 percentage points above; depreciate by about 2%
• B) 3 percentage points above; depreciate by about 3%
• C) 3 percentage points below; appreciate by about 3%
• D) 3 percentage points below; depreciate by about 3%
• E) 2 percentage points below; appreciate by about 2%

---

Definitions:

Football Players

Athletes who specialize in playing the sport of football, which involves team strategies to move a ball into the opposition's goal area to score points.

Smoking Cigarettes

The act of inhaling and exhaling the smoke produced by burning tobacco in rolled paper.

Critical Thinking

A way of evaluating the claims and comments of other people that involves skepticism and examination of evidence.

Reinforcement

In behavioral psychology, a consequence applied that will strengthen an organism's future behavior whenever that behavior is preceded by a specific antecedent stimulus.