Evidence from the United States from 1973 to 2016 shows there is a correlation between nominal interest rates and changes in exchange rates.a.not even close to the relationship between changes in exchange rates and government spending.b.not at all similar to the relationship between governmental deficits and changes in exchange rates.c.a lot closer than the relationship between changes in real interest rates and exchange rates.d.not even close to the relationship between changes in real interest rates and exchange rates.

In the context of interest rates and inflation, which of the following statements is accurate?A.The nominal interest rate is always higher than the real interest rate.B.The real interest rate is the difference between the nominal interest rate and the inflation rate.C.If the nominal interest rate is constant and inflation rises, the real interest rate will rise.D.The real interest rate reflects the nominal rate of return on a loan, without adjusting for inflation.

Year-to-year movements in real exchange rates between two countries with fixed nominal exchange ratesGroup of answer choiceschanges in relative rates of inflation.changes in relative growth rates of output.changes in relative net exportsnone of the above

Real and nominal interest rates

According to the Fisher effect, the nominal interest rate moves one-for-one with changes in the:A.inflation rate.B.expected inflation rate.C.ex ante real interest rate.D.ex post real interest rate

The interest rate in a small open economy can differ from the world interest rate because of:country risk and expectations of future exchange-rate changes.perfect capital mobility and purchasing power parity.currency boards and monetary unions.dollarization and speculative attacks.