A.For a given U.S. interest rate and a given expectation with regard to the future exchange rate, a rise in the interest rate paid by euro deposits causes the dollar to depreciate.
B.For a given U.S. interest rate and a given expectation with regard to the future exchange rate, a rise in the interest rate paid by euro deposits causes the dollar to appreciate.
C.A rise in the interest rate paid by euro deposits does not affect the value of the dollar.
D.A rise in the interest rate paid by euro deposits causes the dollar to depreciate.
E.None of the above
Answer: A
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