If the U.S.and Japan engage in much financial flows but little trade,_______ directly influences their exchange rate the most. If the U.S.and Switzerland engage in much trade but little financial flows,_______ directly influences their exchange rate the most.
A) interest rate differentials;interest rate differentials
B) inflation and interest rate differentials;interest rate differentials
C) income and interest rate differentials;inflation differ entials
D) interest rate differentials;inflation and income differ entials
E) inflation and income differentials;interest rate differ entials

Question

If the U.S.and Japan engage in much financial flows but little trade,_______ directly influences their exchange rate the most.  If the U.S.and Switzerland engage in much trade but little financial flows,_______ directly influences their exchange rate the most.
A) interest rate differentials;interest rate differentials
B) inflation and interest rate differentials;interest rate differentials
C) income and interest rate differentials;inflation differ entials
D) interest rate differentials;inflation and income differ entials
E) inflation and income differentials;interest rate differ entials

Quizplus · Accepted Answer

Interest rate differentials influence exchange rates when financial flows are significant, while inflation and income differentials influence exchange rates when trade is significant.

If the USAnd Japan Engage in Much Financial Flows but Little Trade,_______