https://padlet.com/Hotcakequemado/y95llxbkgdzaetet Activity 9 en-us 2023-03-27 05:05:36 UTC 2023-03-27 05:22:05 UTC hello@padlet.com Hotcakequemado https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532489613 states that a difference in interest rates between two countries will be reflected in the future exchange rate of the two currencies. Specifically, if an interest rate is higher in one country than in another, the currency of the first country should depreciate against the currency of the second country. If the interest rate is lower in one country than in another, the currency of the first country should appreciate against the currency of the second country.]]> 2023-03-27 05:09:45 UTC https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532489613 Hotcakequemado https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532491921 The EFI has implications for imports and exports. If an interest rate is higher in the home country than in the foreign country, the home country's currency will devalue, making exports cheaper and therefore more attractive to foreign buyers, while imports will be more expensive and therefore less attractive to domestic consumers. If an interest rate is lower in the home country than in the foreign country, the home country's currency will appreciate, making exports more expensive and therefore less attractive to foreign buyers, while imports will be cheaper and therefore more attractive to domestic consumers.]]> 2023-03-27 05:11:37 UTC https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532491921 Hotcakequemado https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532496840 In interest rates, it would be if one country increases its interest rate to combat inflation, while another country maintains a low interest rate to stimulate the economy. If the difference in interest rates between the two countries is large enough, the EFI will predict that the currency of the country with the higher interest rate will depreciate against the currency of the country with the lower interest rate.]]> 2023-03-27 05:15:28 UTC https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532496840 Hotcakequemado https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532499313 If the interest rate in one country is lower than in other countries, the country's currency will appreciate relative to the other countries' currencies. This may be the result of a more expansive fiscal policy or a monetary policy that encourages spending and economic growth in the country. A recent example of this shift can be seen in the monetary policy of the EU and Japan, which have kept interest rates low to stimulate the economy and combat deflation.]]> 2023-03-27 05:17:25 UTC https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532499313 Hotcakequemado https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532504652 If the inflation rate in one country is higher than in another country, the nominal interest rate in the first country will have to be higher to compensate for the depreciation of its currency. Therefore, the country with a higher inflation rate will have a higher nominal interest rate.

If the inflation rate in one country is lower than in another country, the nominal interest rate in the first country will need to be lower to maintain the value of its currency. Therefore, the country with a lower inflation rate will have a lower nominal interest rate.]]> 2023-03-27 05:22:05 UTC https://padlet.com/Hotcakequemado/y95llxbkgdzaetet/wish/2532504652