International fisher effect

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Reference no: EM131195977

International Fisher effect: combinations of Fisher effect and Relative Purchasing Power Parity. Briefly describe the implications of the International Fisher Effect when the JPY interest rate is lower relative to GBP. Circle one of two choices.

1) Relatively low JPY interest will have [ high/or low] expected inflation.

2) Import from the United Kingdom to Japan will [increase or decrease] and, therefore, the supply of JPY will [increase or decrease] and the demand for GBP will [increase or decrease].

3) Export from Japan to the United Kingdom will [increase or decrease] and, therefore, the supply of GBP will [increase or decrease] and the demand for JPY will [increase or decrease].

4) Therefore, JPY will [appreciate or depreciate] relative to GBP.

Reference no: EM131195977

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