What types of exchange rate regimes may this describe

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1) The U.K. has a higher inflation rate than the U.S.A. Based on the supply of and demand for each country’s currency, would we expect the currency of The U.K. to (nominally) appreciate or depreciate against the currency of U.S.A.? Why?

2) Refer to question one. Suppose we hold the nominal exchange rate constant now. Would we expect a real depreciation or appreciation of U.K.’s currency? Why? What types of exchange rate regimes may this describe?

Reference no: EM131424779

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