If the interest rate on a bank deposit in the United States is 3 percent while a similar deposit earns 6 percent in Britain, then we could expect that deposits would flow to

Question

Quizplus · Accepted Answer

Deposits would flow to Britain if the pound is expected to depreciate less than 3 percent because the higher interest rate in Britain would still offer a better return compared to the U.S., even after accounting for the potential depreciation of the pound.

If the Interest Rate on a Bank Deposit in the United