If the foreign interest rate increases________? Group of answer choices 1The exchange rate is unaffected. 2The exchange rate could decrease (the US $ depreciates) or it could increase (the US $ appreciates). 3The exchange rate decreases (the US $ depreciates). 4The exchange rate increases (the US $ appreciates).

Principles of Economics (MindTap Course List)
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ISBN:9781305585126
Author:N. Gregory Mankiw
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Chapter31: Open-Economy Macroeconomics: Basic Concepts
Section31.2: The Price For International transaction: Real And Nominal Exchange Rate
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If the foreign interest rate increases________?
Group of answer choices

1The exchange rate is unaffected.

2The exchange rate could decrease (the US $ depreciates) or it could increase (the US $ appreciates).

3The exchange rate decreases (the US $ depreciates).

4The exchange rate increases (the US $ appreciates).

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