c. suppose the exchange rate is $2. at this exchange rate, is there an excess demand or an excess supply of euros? will this imbalance cause an increase or a decrease in the dollar pri

If a countrys currency is expected to appreciate in value, what would you think will be the impact of expected exchange rates on yields (e.g., the Interest rate paid on government bonds) in that country? Hint: Think about how expected exchange rate changes and interest rates affect a currencys demand and supply.

Does a higher rate of return in a nations economy, all other things being equal, affect the exchange rate of its currency? If so, how?

Suppose U.S. interest rates decline compared to the rest of the world. What would be the likely impact on the demand for dollars, supply of dollars, and exchange rate for dollars compared to, say, euros?