________ states that the spot exchange rate should change in an equal amount but in the opposite direction to the difference in interest rates between two countries.

Question

Quizplus · Accepted Answer

The Fisher-open hypothesis states that the spot exchange rate should change in an equal amount but in the opposite direction to the difference in interest rates between two countries. This means that if the interest rates in one country increase, the value of its currency should appreciate relative to the currency of the other country with lower interest rates. Therefore, choice A) is the correct answer.

________ States That the Spot Exchange Rate Should Change in an Equal