The dollar return on a foreign investment is less than the interest rate on the foreign asset, if the foreign currency depreciates against the U.S. dollar between the purchase date and the maturity date.
a. True
b. False
Indicate whether the statement is true or false
Question 2
Under a system of flexible exchange rates, an increase in the foreign demand for the U.S. dollar in the foreign exchange market will cause the:
a. dollar to appreciate.
b. dollar to depreciate.
c. U.S. trade deficit to decrease.
d. U.S. inflation rate to increase.
Table 6.1 illustrates the main regime types and their differences. It breaks the regimes into four
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