the exchange rate regime is flexible, a decrease in the foreign interest rate will use: O the IP curve to shift to the left/up o the IP curve to become vertical o the IP curve to shift to the right/down O a movement along the IP curve O the IP curve to become horizontal

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter19: International Finance And The Foreign Exchange Market
Section: Chapter Questions
Problem 1CQ
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If the exchange rate regime is flexible, a decrease in the foreign interest rate will
cause:
the IP curve to shift to the left/up
the IP curve to become vertical
the IP curve to shift to the right/down
a movement along the IP curve
the IP curve to become horizontal
Transcribed Image Text:If the exchange rate regime is flexible, a decrease in the foreign interest rate will cause: the IP curve to shift to the left/up the IP curve to become vertical the IP curve to shift to the right/down a movement along the IP curve the IP curve to become horizontal
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