(Figure: The Domestic Interest Rate) Using the graph, if the expected future exchange rate falls from $1.224 to $1.15:
A) the dollar interest rate line shifts up and the spot rate rises.
B) the dollar interest rate line shifts down and the spot rate rises.
C) the foreign return line shifts up and to the right and the spot rate rises.
D) the foreign return line shifts down and to the left and the spot rate falls.

Question

(Figure: The Domestic Interest Rate) Using the graph, if the expected future exchange rate falls from $1.224 to $1.15: 
A) the dollar interest rate line shifts up and the spot rate rises. 
B) the dollar interest rate line shifts down and the spot rate rises. 
C) the foreign return line shifts up and to the right and the spot rate rises. 
D) the foreign return line shifts down and to the left and the spot rate falls.

Quizplus · Accepted Answer

The Answer of (Figure: The Domestic Interest Rate) Using the graph, if the expected future exchange rate falls from $1.224 to $1.15: 
A) the dollar interest rate line shifts up and the spot rate rises. 
B) the dollar interest rate line shifts down and the spot rate rises. 
C) the foreign return line shifts up and to the right and the spot rate rises. 
D) the foreign return line shifts down and to the left and the spot rate falls.

(Figure: the Domestic Interest Rate) Using the Graph, If the Expected