An Increase in the Interest Rates Will

question 150

Multiple Choice

An increase in the interest rates will

• A)​cause people to hold less money, which, in turn, means that the velocity of money increases.
• B)​cause people to hold less money, which, in turn, means that the velocity of money decreases.
• C)​cause people to hold more money, which, in turn, means that the velocity of money increases.
• D)​cause people to hold more money, which, in turn, means that the velocity of money decreases.

Assess the net present value of international projects using different currency approaches.

Identify the relationship between spot rates and forward rates in the context of the forward rate market.

Apply the concept of purchasing power parity (PPP) in determining exchange rates based on price levels.

Evaluate the impact of political risk on international investments and how it can be managed.