Macroeconomics,6eChapter OpennessinGoodsandFinancial MultipleChoiceAtariffaforeignanorderforforeigngoodsthathavenotyetbeenabarterarrangementbetweenimportersandataxonimportedarestrictiononthetyofimportedgoodsallowedintothecountry. Diff:IntheU.S.,overthepastfortyexportsas rcentageofGDPhaveincreased,whileimportshas rcentageofGDPhaveexportsas rcentageofGDPhavedecreased,whileimportshas rcentageofGDPhavebothexportsandimports rcentageofGDPhavebothexportsandimports rcentageofGDPhavebothexportsandimportsas rcentageofGDPhaveremainedconstant. Diff:In2010,whichofthefollowingcountrieshadthehighestratioofexportstoUnited Diff:1Theratioofacountry'sexportstoitsGDPbegreaterthanbelessthanequaltheratioofimportstobelargerthantheratioofimportsto Diff:Whichofthefollowingbestdefinestherealexchangethepriceofforeignbondsintermsofdomesticthepriceofforeigncurrencyintermsofdomesticthepriceofdomesticgoodsintermsofforeignthepriceofdomesticcurrencyintermsofforeign Diff:Whichofthefollowing,allelsefixed,willcausetherealexchangeratetoanominalareductionintheforeignpriceareductioninthedomesticpriceallofthe Diff:FromtheoftheUnitedStates,anincreaseinthenominalexchangeratewillcausewhichofthefollowing?the eslessexpensivetoforeigngoodsaremoreexpensivetoforeigncurrencyismoreexpensivetoAmericangoodsaremoreexpensiveto Diff:Whenthedollarappreciatesrelativetothepound,thepoundpriceofthedoesnotincreasesordecreases,dependingontheamountofthechangesinthenextperiod. Diff:Supposethereisarealdepreciationofthedollar.Whichofthefollowingmayhaveforeigncurrency emoreexpensiveinforeigngoods emoreexpensivetotheforeignpricelevelhasincreasedrelativetotheU.S.priceallofthe Diff:Supposethatoverthepastdecade,U.S.inflationislessthanthatinMexico.Furtherassumethatduringthissameperiod,thedollardepreciatesrelativetotheMexicanpeso.Giventhistherealexchangerateremainstherealexchangeratemusttherealexchangeratemusttherealexchangeratecanincreaseorremainthesame,butnottherealexchangeratecandecreaseorremainthesame,butnotincrease. Diff:/ /關稅是A） 進口商和出口商之間的安排。D） 進入該國的進口貨物數量的限制。答案：在，過去四十年 出口占國內生產總值的百分比有所增加，而進口占國內生產總值的百分比有所下降。B）出口占國內生產總值的百分比有所下降，而進口占國內生產總值的百分比有所增加。C）出口和進口占GDPC）一個國家的出口與其GDP少于一個。C）等于進口與GDP的比率。D）大于進口與GDP的比率。E）國外商品的外國商品價格D）以外幣計算的本幣價格E）D）以上所有內容E）從的角度來看，名義匯率的增加將導致以下哪一項？A）外國人的變得便宜了 外國商品對人來說更貴 國貨幣對人來說更貴 減少。C）假設實際貶值。可能發生了以下哪種情況？A）外幣變得更加昂貴。 外國商品對人來說變得更加昂貴。 對于價格水平，國外價格水平有所提高。D）實際匯率必須增加。 實際匯率可以增加或保持不變，但不會減少。E）America'slargesttradingpartnerEuropean Diff:Anothernamefor"currentaccounttransactions""capitalaccount "nettransfers"checkingaccount Diff:BecausetheU.S.traditionallygivesmoreforeignaidthanitreceives,theU.S.traditionallyhasanegativevalueforthecapitalaccountthetrade nettransfers Diff:1WhentheU.S.hasacurrentaccountsurplus,weknowthatitisrunningabalancedtradelendingtotherestoftheborrowingfromtherestofthesufferingfromnegative Diff:Thedifferencebetweennetcapitalflowsandthecurrentaccountdeficitiscalledcapitalaccountcapitalaccountinternationalmissingstatistical Diff:InacountrylikeSaudiArabia,whichearnssubstantial efromholdingthestocksandbondsofothercountries,wewouldexpectGNPtobelargerthanacurrentaccountacurrentaccountsurpluslargerthanacurrentaccountsurpluslargerthanGDPtobelargerthanGNP. Diff:Iftheexchangeratebetweenthedollarandthepound(thepoundpriceofthedollar)iscurrently1.50,andisexpectedtobe1.35inoneyear,thentheexpectedrateofdepreciationofthedollarisdepreciationofthedollarisappreciationofthedollarisappreciationofthedollaris Diff:Assumethattheuncoveredinterestparityconditionholds.AlsoassumethattheU.S.interestrateislessthantheU.K.interestrate.Giventhisinformation,weknowthatinvestorsexpectthepoundtothepoundtothedollar-poundexchangeratetoremaintheU.S.interestrateto Diff:Assumethattheinterestrateinaforeigncountryis7%andthattheforeigncurrencyisexpectedtodepreciateby3%duringtheyear.ForeachdollarthataU.S.residentinvestsinforeignbonds,he/shecanexpecttogetbackanapproximatetotalof Diff:2Supposetwocountriesmakeacrediblecommitmenttofixtheirbilateralexchangerate.Insuchasituation,weknowthattheuncoveredinterestparityconditionnolongertherealexchangeratemustbeconstantaseachcountrycanfreelyallowitsinterestratetodivergefromthatoftheothertheinterestrateinthetwocountriesmustbeneithercountrywillrunatradedeficit. 1最大的貿易伙伴是A）B）歐盟。E） 由于傳統上提供的外援比其收到的，因此傳統上具有價B）貿易平衡。C）投資收益。D）收到的凈轉賬。E）以上所有內容答案：D當有經常賬戶盈余時，知道它也是A）運行平衡的交易賬戶。 C）國際錯誤。D）缺少數字。E）統在像沙特這樣的國家，可以期待通過持有其他國家的和債券賺取可觀B）經常賬戶赤字。 常賬戶盈余大于GDP。E）GDP大于A）貶值10％B）貶值15％C）升值10％D）升值15％A）英鎊貶值。 C）美元兌英鎊匯率保持固定。D） 一，他/她可以期望得到大約的總額A）$.93。$.96。1.04。D）1.07。E） 每個國家都可以地允許其利率與其他國家的利率不同。D） In2010,exports rcentageofGDPfortheUnitedStatesareapproximabetween1%andbetween10%andbetween20%andbetween40%and Diff:Asof2010,theratioofexportstoGDPforBelgiumwasapproximayequal Diff:1IfthepricelevelinJapanis1.0,thepricelevelintheU.S.is2.0,anditcosts100Yentobuyonedollar,thentherealexchangeratebetweentheU.S.andJapanis Diff:2Year-to-yearmovementsinrealexchangeratesbetweenindustrializedcountriesliketheU.S.andCanadaarecausedmostlybychangesinrelativeratesofchangesinrelativegrowthratesofchangesinquotasorchangesincapitalchangesinnominalexchangerates. Diff:SupposetheU.S.one-yearinterestrateis3%peryear,whileaforeigncountryhasone-yearinterestrateof5%peryear.Ignoringriskandtransactioncosts,aU.S.investorshouldinvestinforeignbondsaslongastheexpectedyearlyrateofdepreciationoftheforeigncurrencylessthangreaterthangreaterthanlessthan Diff:2WhichofthefollowinghasoccurredfortheUnitedStatessincetheratioofexportstoGDP(X/Y)andtheratioofimportstoGDP(IM/Y)havebothX/YhasincreasedwhileIM/YhasX/YhasdecreasedandIM/YhasX/YhasdecreasedandIM/Yhasdecreased. Diff:WhichofthefollowinghasoccurredfortheUnitedStatessincetheratioofexportstoGDP(X/Y)andtheratioofimportstoGDP(IM/Y)havebothX/YhasincreasedwhileIM/YhasX/YhasdecreasedandIM/YhasX/YandIM/Yhavestayedrelatively Diff:TheratioofexportstoGDPfortheUnitedStatesin2010is yequal Diff:1EstimatesarethattradablegoodsintheU.S.accountforapproxima ywhatshareofGDPintheU.S.? Diff:In2010,whichofthefollowingcountrieshadthelowestratioofexportsto Diff:1A）20％么和之間的實際匯率是A2。B1050100。EC）或關稅的變化。 資本的變化。 成本，只要預期的外幣年折舊率，投資者就應該投資外國債券。A）出口與GDP的比率（XY）和進口與GDP的比率（IMY）都有所增加。B）當IM/Y減少時，X/Y增加。C）XY減少，IMY增加。D）XY減少，IMY減少。A）出口與GDP的比率（X/Y）和進口與GDP的比率（IM/Y）均下降B）當IM/Y減少時，X/Y增加C）X/Y減少，IM/Y增加D）X/Y和IM/Y保持相對恒定E）B）16％C） 上都不是答案：A）B）E）答案：EIn2010,whichofthefollowingcountrieshadthehighestratioofexportstoUnited Diff:1ThedifferencesintheratiosofexportstoGDPacrosscountriesarebelievedtobecausedprimarilybytradeeachcountry'smonetaryfiscalinflationinthedomesticcountry. Diff:ThedifferencesintheratiosofexportstoGDPacrosscountriesarebelievedtobecausedprimarilybytradeeachcountry'sallofthe Diff:1Thenominalexchangerate(E)asdefinedinthetextthenumberofunitsofforeigncurrencyyoucanobtainwithoneunitofdomesticthenumberofunitsofdomesticgoodsyoucanobtainwithoneunitofforeignthepriceofdomesticcurrencyintermsofforeignnoneofthe Diff:1WhenEincreasesby5%,weknowarealappreciationwilloccurifPdecreasesbyarealdepreciationwilloccurifPalsoincreasesbyanominalappreciationwillanominaldepreciationwilloccur. Diff:WhenEdecreasesby3%,weknowarealappreciationwilloccurifPalsofallsbyarealdepreciationwilloccurifPincreasesbynominal Diff:AnominaldepreciationoftheMexicanpeso(againstallcurrencies)indicatesthepesopriceofforeigncurrencyhastheMexicanrealexchangeratewillnotchangeifthepricelevelinMexicothepesopriceof,forexample,theU.K.poundhasthenumberofunitsofforeigncurrencythatonecanobtainwithonepesohasdecreased. Diff:AnominalappreciationoftheJapaneseyen(againstallcurrencies)indicatestheyenpriceoftheU.S.dollarhastheyenpriceoftheU.K.poundhasthenumberofunitsofforeigncurrencythatonecanobtainwithoneyenhas Diff:Whichofthefollowingexpressionsrepresentstherealexchangerate Diff:WhichofthefollowingexpressionsrepresentsthedollarpriceofforeignE Diff:C）C）貨幣政策。 內通貨膨脹。答案：BC）地理。 以上所有內容E）B 可以用一件外國商品獲得的國內商品單位數量。C） 外幣比索價格下跌 如果墨西哥的價格水平下降，墨西哥的實際匯率不會改變。C） 英鎊的日元價格上漲。 一個日元可以獲得的外幣單位數量增加了。D）A）E/B）EP*/P.C）EP*。D）EPP*E）上都不是答案：DA）EP*/P.B）EP/P*C）1/E.D）Assumethatthenominalexchangeratedecreasesby4%.Ifprices(bothdomesticandforeigndonotchange),weknowthatforeigngoodsarenowrelatively foreigngoodsarenowrelativelymoredomesticgoodsarenowrelativelymore Diff:2Assumethatthenominalexchangerateincreasesby2%.Ifprices(bothdomesticandforeigndonotchange),weknowthatdomesticgoodsarenowrelatively domesticgoodsarenowrelativelymoreforeigngoodsarenowrelatively Diff:2Areductionintherealexchangerateindicatesforeigngoodsarenowrelatively foreigngoodsarenowrelativelymoredomesticgoodsarenowrelativelymore Diff:1Anincreaseintherealexchangerateindicatesdomesticgoodsarenowrelatively domesticgoodsarenowrelativelymoreforeigngoodsarenowrelatively Diff:1Whichofthefollowingwillcausearealareductioninadecreaseinanincreasein Diff:Whichofthefollowingwillcausearealanincreaseinareductioninareductioninallofthe Diff:Whichofthefollowingeventswillcausethesmallestchangeintherealexchangeratea6%dropinEanda6%increaseintheforeignpricelevela6%increaseinthedomesticpricelevel(P)anda6%reductionina6%dropinEanda6%reductionina3%increaseina2%increaseinEanda2%increaseinP Diff:Whichofthefollowingeventswillcausethelargestrealdepreciationforthedomestica6%reductioninEanda6%increaseintheforeignpricelevela6%increaseinthedomesticpricelevel(P)anda6%reductionina6%reductioninEanda6%reductionina3%increaseina2%increaseinEanda2%increaseinP Diff:SupposeyouhaveoneU.S.dollarwithwhichyouwishtopurchaseU.K.(one-year)bondsinperiodt.WhichofthefollowingexpressionsrepresentstheamountofU.S.dollarsyouwillreceiveinoneyear(i.e.,periodt+1)frompurchasingU.K.bondsinperiodt?i1+(1+(1+ Diff:SupposeyouhaveoneU.S.dollarwithwhichyouwishtopurchaseU.K.(one-year)bondsinperiodt.WhichofthefollowingexpressionsrepresentstheamountofU.K.poundsyouwillreceiveinoneyear(i.e.,periodt+1)frompurchasingU.K.bondsinperiodt?i1+(1+(1+ A）外國商品現在相對便宜。B）外國商品現在相對更貴。C）國內商品現在相對更貴。D）A和C實際匯率的增加表明A）國內商品現在相對便宜。B）國內商品現在相對更貴。C）外國商品現在相對便宜。D）B）PC）P*D）上都不是答案：DB）P*減少 B）國內價格水平（P）增加6％，P*減少6％E）E增加2％，P增加 B）國內價格水平（P）增加6％，P*減少6％買英國債券期間的一年內（即期間t+1）將獲得的金額？A）B）1+i*C）（1i*）Eet1EtD）（1i*）EtEet1英國債券，一年內（即t+1期）您將獲得的英鎊數量？A）我B1+iC）（1i*）Eet1EtD）（1i*）EtEet1WhichofthefollowingexpressionsrepresentstheamountofforeigncurrencyyoucanobtainwithoneU.S.dollar?1/ Diff:Forthisquestion,assumetheinterestparityconditionsholds.Alsoassumethatthedomesticinterestrateis9%andthattheforeigninterestrateis5%.Giventhisinformation,wewouldexpectthatindividualswillonlyholdforeignindividualswillonlyholddomesticthedomesticcurrencyisexpectedtoappreciatebythedomesticcurrencyisexpectedtodepreciateby4%. Diff:Forthisquestion,assumetheinterestparityconditionsholds.Alsoassumethatthedomesticinterestrateis10%andthattheforeigninterestrateis7%.Giventhisinformation,wewouldexpectthatindividualswillonlyholdforeignindividualswillonlyholddomesticthedomesticcurrencyisexpectedtoappreciatebythedomesticcurrencyisexpectedtodepreciateby3%. Diff:Assumetheinterestparityconditionholdsandthatindividualsexpectthedollartoappreciateby5%duringthecomingyear.Giventhisinformation,weknowthattheinterestratedifferentialbetweenthetwocountriesislessthani<i=individualswillonlyholdforeign Diff:Whichofthefollowingconditionswilloccurwhentwocountriesareengagedinacredible,fixedexchangerateregime?E=E>i=E< Diff:2Forthisquestion,assumethatthedomesticinterestrateis8%andthattheforeigninterestrateis6%.Andfinally,assumethatthedomesticcurrencyisexpectedtodepreciateby3%duringthecomingyear.Giventhisinformation,weknowthatindividualswillonlyholddomesticindividualswillonlyholdforeignindividualswillbeindifferentaboutholdingdomesticorforeigntheinterestparityconditionholds. Diff:Forthisquestion,assumethatthedomesticinterestrateis6%andthattheforeigninterestrate4%.Andfinally,assumethatthedomesticcurrencyisexpectedtoappreciateby3%duringthecomingyear.Giventhisinformation,weknowthatindividualswillonlyholddomesticindividualswillonlyholdforeignindividualswillbeindifferentaboutholdingdomesticorforeigntheinterestparityconditionholds. Diff:Forthisquestion,supposethedomesticinterestrateis4%andthattheforeigninterestrateis7%.Andfinally,assumethatthedomesticcurrencyisexpectedtodepreciateby3%duringthecomingyear.Giventhisinformation,weknowthatindividualswillonlyholddomesticindividualswillonlyholdforeignindividualswillbeindifferentaboutholdingdomesticorforeigntheinterestparityconditionholds. Diff:Supposethedomesticinterestrateis3%andthattheforeigninterestrateis6%.Andfinally,assumethatthedomesticcurrencyisexpectedtoappreciateby4%duringthecomingyear.Giventhisinformation,weknowthatindividualswillonlyholddomesticindividualswillonlyholdforeignindividualswillbeindifferentaboutholdingdomesticorforeigntheinterestparityconditionholds. Diff:Whichofthefollowing,allelsefixed,willcausetherealexchangeratetoanominalanincreaseintheforeignpriceanincreaseinthedomesticpriceallofthe B）Eet1C）1/Eet+1D） 上都不是答案：A于這些信息，希望如此A）個人只持有外國債券。B）個人只持有國內債券。C）預計本國貨幣將升值4％。D）鑒于這些信息，希望如此A）個人只持有外國債券。B）個人只持有國內債券。C）預計本國貨幣將升值3％。D）B）我<i*。C）i=i*。D）個人只持有外國債券。E）A）E=B）E>D）E年貶值3％。鑒于此信息，知道這一點 人對持有國內或國外債券無動于衷。D）預計將升值3％。鑒于此信息，知道這一點 人對持有國內或國外債券無動于衷。D）年貶值3％。鑒于此信息，知道這一點 人對持有國內或國外債券無動于衷。D）鑒于此信息，知道這一點 D）以上所有內容 FromtheoftheUnitedStates,areductioninthenominalexchangeratewillcausewhichofthefollowing?the esmoreexpensivetoforeigngoodsarelessexpensivetoforeigncurrencyislessexpensivetoAmericangoodsarelessexpensiveto Diff:Whenthedollardepreciatesrelativetothepound,thepoundpriceofthedoesnotincreasesordecreases,dependingontheamountofthechangesinthenextperiod. Diff:Supposethatoverthepastdecade,U.S.inflationisgreaterthanthatinMexico.Furtherassumethatduringthissameperiod,thedollarappreciatesrelativetotheMexicanpeso.Giventhisinformation,therealexchangerateremainstherealexchangeratemusttherealexchangeratemusttherealexchangeratecanincreaseorremainthesame,butnottherealexchangeratecandecreaseorremainthesame,butnotincrease. Diff:Assumethattheuncoveredinterestparityconditionholds.AlsoassumethattheU.S.interestrateisgreaterthantheU.K.interestrate.Giventhisinformation,weknowthatinvestorsexpectthepoundtothepoundtothedollar-poundexchangeratetoremaintheU.S.interestrateto Diff:AnominalappreciationoftheMexicanpeso(againstallcurrencies)indicatesthepesopriceofforeigncurrencyhastheMexicanrealexchangeratewillnotchangeifthepricelevelinMexicothepesopriceof,forexample,theU.K.poundhasthenumberofunitsofforeigncurrencythatonecanobtainwithonepesohasincreased. 從的角度來看，名義匯率的下降將導致以下哪一項？A） 外國人對人來說便宜。 當相對于英鎊貶值時，的英鎊價格A）B）減少。C）A）實際匯率保持不變。 匯率可以增加或保持不變，但不會減少。E）實CA）英鎊貶值。 C）美元兌英鎊匯率保持固定。D） A）外幣比索價格上漲 如果墨西哥的價格水平下降，墨西哥的實際匯率不會改變。C） Essay1)Explainthethreedistinctnotionsof Therearethreenotionsofopenness.,thereisopennessinthegoodsmarketwhereagentsbuydomesticandforeigngoodsanddomesticfirmssellgoodsabroad.Second,thereisopennessinfinancialmarketswhereindividualscanpurchase,forexample,domesticorforeignbonds.Andthird,thereisopennessinfactormarketswherefirmscanlocateeitherdomesticallyorinothercountries.Workerscsomovebetweencountries.2),writeouttheexpression/equationfortherealexchangerate.Second,explainallfactorsthatdeterminetherealexchangerate. Therealexchangerateisthepriceofdomesticgoodsintermsofforeigngoods.ItisrepresentedasEP/P*.AnincreaseinE,anominalappreciation,raisesthepoundpriceofthedollar.Thiswillalsoraisetherelativepriceofdomesticgoods.AnincreaseinP*,theforeignpricelevel,reflectsanincreaseintheforeigncurrencypriceofforeigngoods.Thiswillreducetherelativepriceofdomesticgoods.Andfinally,anincreaseinP,thedomesticpricelevel,reflectsanincreaseinthedollarpriceofdomesticgoods.Thiswillincreasetherelativepriceofdomesticgoodsintermsofforeigngoods.Whatarethedifferencesbetweentherealexchangerateandnominalexchangerate? Therealexchangerate,EP/P*,representstherelativepriceofdomesticgoodstermsofforeigngoods.Thenominalexchangerate,E,isthepoundpriceofdomesticcurrencyor,equivalently,therelativepriceofdomesticcurrencyintermsofforeigncurrency.Discusswhatfactorscouldcausearealdepreciation. DecreaseinE;increaseinP*;anddecreaseinP.Explainthedifferencebetweengrossdomesticproductandgrossnational GDPrepresentsthemarketvalueofallfinalgoodsandservicesproducedINacountryduringagivenperiod.GNPisthemarketvalueofallfinalgoodsandservicesproducedbydomesticallyownedfactorsofproductioninagivenperiod.Supposeyouareconsideringthepurchaseofabondissuedinanothercountry.Whatcalculationsmustyoudotocalculatetheexpectedreturnonaforeignbond?Explain. Youmustdeterminetheamountofforeigncurrencyyoucanobtainwithoneunitofdomesticcurrency(E).Youthenmustdeterminehowmuchforeigncurrencyyouwillobtaininoneyearafterpurchasingforeignbonds.Andfinally,youmustthencalculatehowmuchdomesticcurrencyyouwillreceiveinoneyearwhenyouconverttheforeigncurrencybacktodomesticcurrency.Explainwhatfactorsdeterminetheexpectedreturnonaforeign Thecurrentexchangerate,thecurrentforeigninterestrate,andthefutureexpectedexchangerate.Supposetheinterestparityconditionholdsandthatthedomesticinterestrateisgreaterthantheforeigninterestrate.Whatdoesthisimplyaboutthecurrentversusfutureexpectedexchangerate?Explain. Ifi>i*,weknowthattheforeigncurrencymustbeexpectedtoappreciatetoequatetheexpectedreturnsonthetwobonds.答：有三種開放概念。首先，商品市場是開放的，商國內和國外商品，國內公司在國外銷售商品。其次，存在開放性，個人可以國內或國外債券。第三，要答：實際匯率是國外商品的外國商品價格。它表示為EPP*。名義升值E的增加提高了美元的英鎊價格。這也將提高國內商品的相對價格。國外價格水平P*的增加反映了外國商了國內商品的價格上漲。這將增加國內商品在外國商品方面的相對價格。3）答：實際匯率EPP*代表國內商品的國外商品相對價格。名義匯率E是本國貨幣的英鎊價答案：減少E;增加P*;P減少Supposetheinterestparityconditionholds.Alsoassumethattheone-yearinterestrateintheUnitedStatesis6%andthattheone-yearinterestrateinCanadais6%.Whatdoesthisimplyaboutthecurrentversusfutureexpectedexchangerate(fortheU.S.andCanadiandollars)? Thisimpliesthattherearenoexpectedexchangegainsorlossesfromholdingforeigncurrencydenominatedassetsforoneyear.So,theexchangeratethatfinancialmarketparticipantsexpecttooccurinoneyearisequaltothecurrentexchangerate.Assumingthattheinterestparityconditionholds,whattypeofinformationiscontainedininterestratedifferentialsbetweendomesticandforeignbonds?Explain. Giventhatthedomesticrateequalstheforeigninterestrateminusanyexpectedrateofappreciationofthedomesticcurrency,anydifferenceininterestrateswillreflectthisexpecteddepreciation/appreciationofthedomesticcurrency.Explainwhyacomparisonbetweentheinterestratesondomesticandforeignbondsmightprovidemisleadinginformationaboutwhichbondsyieldthehighestexpectedreturns.Answer:Asimplecomparisonofinterestrateswillignoretheexpectedexchangegains/lossesthatcanoccurfromholdingassetsdenominatedinaforeigncurrency.Hence,suchacomparisonwilllikelyprovideincorrectinformationaboutwhichbondshaveahigherexpectedreturn.Supposetheinterestparityconditionholdsandthatthedomesticinterestrateislessthantheforeigninterestrate.Whatdoesthisimplyaboutthecurrentversusfutureexpectedexchangerate? Ifi<i*,weknowthattheforeigncurrencymustbeexpectedtodepreciatetoequatetheexpectedreturnsonthetwobonds.Supposetheinterestparityconditionholds.Alsoassumethattheone-yearinterestrateintheUnitedStatesis5%andthattheone-yearinterestrateinCanadais6%.Whatdoesthisimplyaboutthecurrentversusfutureexpectedexchangerate(fortheU.S.andCanadiandollars)? Iftheint