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a) If the dollar is expected to appreciate against the yen, uncovered interest parity implies that...

a) If the dollar is expected to appreciate against the yen, uncovered interest parity implies that the U.S. nominal interest rate must be greater than the Japanese nominal interest rate.

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Answer #1

"True"

An appreciation in the value of dollar signifies that the demand for the dollar is more than the demand for Yen it is possible when the nominal interest rate in the US is more than the nominal interest rate in Japan which will cause a capital flight from Japan and an increased money supply in the US.

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