(Answered) This morning the exchange rate between the united states of

Economics

This morning the exchange rate between the United States of Albion dollar and the Republic of Oz dollar was 1.50:1 and interest rates in both countries were 6%.

(a) If the market thinks that later today the Republic of Oz will raise interest rates to 8%, what will happen to the exchange rate?

(b) If instead interest rates in Oz are increased to only 7%, what will happen to the ex- change rate?

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Microeconomics, Economics

Category:- Microeconomics
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