Relatively high real interest rates in the United States tend to ?

A. decrease the foreign demand for dollars causing the dollar to depreciate
B. decrease the foreign demand for dollars causing the dollar to appreciate
C. increase the foreign demand for dollars causing the dollar to depreciate
D. increase the foreign demand for dollars causing the dollar to appreciate

For the United States suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent For Japan the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 5 percent the above variables would cause investment funds to flow from ?

A. The United States to Japan causing the dollar to depreciate
B. The United States to Japan causing the dollar to appreciate
C. The Japan to United States, causing the dollar to depreciate
D. The Japan to United States, causing the dollar to appreciate

Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?

A. anticipate the dollar to depreciate against the euro
B. anticipate the dollar to appreciate against the euro
C. anticipate the dollar’s exchange rate against the euro to remain constant
D. have no anticipation concerning future movements in the dollar/euro exchange rate

Relatively low real interest rates in the United States tend to ?

A. decrease the foreign demand for dollars causing the dollar to depreciate
B. decrease the foreign demand for dollars causing the dollar to appreciate
C. increase the foreign demand for dollars causing the dollar to depreciate
D. decrease the foreign demand for dollars causing the dollar to appreciate

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