Assume that the one-year interest rate in the U.S. is 7% and in the U.K. is 5%. According to the international Fisher effect, British pound's spot exchange rate should ____ by about ____ over the year.
A) depreciate; 1.9%
B) appreciate; 1.9%
C) depreciate; 3.94%
D) appreciate; 3.94%
Correct Answer:
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