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Basic Question 5 of 8
In the Taylor rule framework, the euro will appreciate against the U.S. dollar if:
B. the inflation rate in the euro area is higher than the inflation rate in the U.S.
C. the ECB's target inflation rate is higher than the Fed's target inflation rate.
A. there is an increase in the inflation gap in the euro area relative to the inflation gap in the U.S.
B. the inflation rate in the euro area is higher than the inflation rate in the U.S.
C. the ECB's target inflation rate is higher than the Fed's target inflation rate.
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I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
explain the potential effects of monetary and fiscal policy on exchange rates;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.