Forward interest rates economy

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weak dollar—D)low unemployment and high inflation in the U.S.

Bretton Woods Agreement—C)1% above or below

Smithsonian Agreement—B)2.25% above or below—​8

Under a fixed exchange Rate system—C) often necessary. (LONG)

the Canadian dollar, Japanese yen, and Australian dollar—​C)managed float system.

C)nonsterilized intervention.

strong dollar—B)downward; upward

weak dollar—C) upward; upward; downward

​When using indirect Intervention,--B) ​interest rates.

central bank Intervention—C)​less effective.—B)interest rates.


devaluation of a Currency—A)high inflation.

revaluation of a Currency—A)To reduce inflation.


forward premium (or Discount) –C)covered interest arbitrage> TIME

among banks—​D)locational arbitrage>NO TIME

two currencies against The U.S. Dollar—B)​triangular arbitrage >NO TIME

If interest rate parity Exists _not feasible—C)​covered interest arbitrage

-​locational Arbitrage—B) BID,ASK

U.S. Interest rate, the—A)larger will be the forward discount of The foreign currency.

According to interest Rate parity (IRP)—D)FORWARD (LONG)

Points above the IRP line—C)(LONG)below the IRP—B)(2LONG)

NOT MENTION IN TEXT—C)Transactional arbitrage


​A)reduce the probability that PPP will hold.

According to the IFE—B)​the British pound will depreciate against the dollar.

​A)the value of the euro would often appreciate against the dollar.

Under purchasing power Parity—C)​the inflation differential.

​C)equal to

​The Fisher effect is Used to determine the—​B)real interest rate.

Latin American—​C)purchasing power parity.

percentage change… inflation —A) PPP

percentage difference—D) IRP

percentage change… interest—C) IFE

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