Changes in which of the following variables will cause the current nominal exchange rate to change?
A)the future expected long-run nominal exchange rate,Eet+n
B)future expected domestic nominal interest rates
C)future expected foreign nominal interest rates
D)all of the above

Question

Quizplus · Accepted Answer

All three variables - the future expected long-run nominal exchange rate, future expected domestic nominal interest rates, and future expected foreign nominal interest rates - can affect the current nominal exchange rate.

Changes in Which of the Following Variables Will Cause the Current