Sulsa Inc. uses fundamental forecasting. Using regression analysis, it has determined the following equation for the euro:
$$\begin{aligned}
\text { euro } _ { t } & = b _ { 0 } + b _ { 1 } I N F _ { t - 1 } + b _ { 2 } I N C _ { t - 1 } \
& = .005 + .9 I N F _ { t - 1 } + 1.1 I N C _ { t - 1 }
\end{aligned}$$
The most recent quarterly percentage change in the inflation differential between the U.S. and Europe was 2 percent, while the most recent quarterly percentage change in the income growth differential between the U.S. and Europe was -1 percent. Based on this information, the forecast for the euro is a(n) ____ of ____%.
A) appreciation; 3.4
B) depreciation; 3.4
C) appreciation; 0.7
D) appreciation; 1.2

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The Answer of Sulsa Inc. uses fundamental forecasting. Using regression analysis, it has determined the following equation for the euro:
$$\begin{aligned}
\text { euro } _ { t } & = b _ { 0 } + b _ { 1 } I N F _ { t - 1 } + b _ { 2 } I N C _ { t - 1 } \
& = .005 + .9 I N F _ { t - 1 } + 1.1 I N C _ { t - 1 }
\end{aligned}$$
The most recent quarterly percentage change in the inflation differential between the U.S. and Europe was 2 percent, while the most recent quarterly percentage change in the income growth differential between the U.S. and Europe was -1 percent. Based on this information, the forecast for the euro is a(n) ____ of ____%.
A) appreciation; 3.4
B) depreciation; 3.4
C) appreciation; 0.7
D) appreciation; 1.2

Sulsa Inc Uses Fundamental Forecasting The Most Recent Quarterly Percentage Change in the Inflation Differential