The Interest Rate in the U

question 29

Multiple Choice

The interest rate in the U.K. is 7%, while the interest rate in the U.S. is 5%. The spot rate for the British pound is $1.50. According to the international Fisher effect (IFE) , the British pound should adjust to a new level of:

• A) $1.47.
• B) $1.53.
• C) $1.43.
• D) $1.57.