An increase in Germany's interest rate and an increase in Germany's price level relative to U.S. price level have the same effect on the exchange rate between the two countries.

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An increase in Germany's interest rate typically appreciates the euro as it attracts foreign capital, while an increase in Germany's price level relative to the U.S. tends to depreciate the euro as it makes German goods more expensive compared to U.S. goods.

An Increase in Germany's Interest Rate and an Increase in Germany's