Questions 35-39 are based on the following information: In O…
Questions 35-39 are based on the following information: In October 2013, there is a consensus in the capital market that the annual inflation rate is likely to be 3.5% in US and -1.5% in China for the next two years. Based on this information, answer the following questions regarding your prediction on the foreign exchange rate. You would expect (US or China?) to have a higher interest rate according to parity relations. (2 points)