If interest rate in New Zealand going up, what happen in the foreign exchange market (FOREX)?radio_button_uncheckedCost of borrwoing in NZ goes up, fewer NZ firms will borrow money to invest, fewer NZ firms will need NZD.Demand for NZD at FOREX will decrease.radio_button_uncheckedCost of borrowing in NZ goes up, fewer foreign people will borrow money from NZ banks, fewer foreign people will need NZD.Demand for NZD at FOREX will decrease.radio_button_uncheckedReward for saving in NZ goes up, more NZ people will save money in NZ, more NZ people will use NZD.Demand for NZD at FOREX will increase.radio_button_uncheckedReward for saving in NZ goes up, more foreign people will save money in NZ, more foreign people will exchange their own currency into NZD. Demand for NZD at FOREX will increase.SUBMIT

If the interest rate in NZ is lower than other countries, how will demand and supply of NZD change at the FOREX?

The annual nominal interest rate is 6% in the euro area and 4% in New Zealand. Suppose that there is no change in the expected future exchange rates, and the UIP holds initially.If the spot exchange rate depreciates today, _______.[Hint: see page 4 of lecture 4A,  question 4 of In-class Quiz - Week 5B]Group of answer choicesthe foreign return in terms of NZD rises.the foreign return in terms of NZD falls.the domestic return falls.the domestic return rises.

Today, the RBNZ permanently rises in the level of the NZ money supply. In the long run, nominal interest rates in NZ _______. In New Zealand, today's spot exchange rate  ________ the expected future exchange rate.Group of answer choicesremains unchanged; rises by a larger magnitude thanfalls; rises by a larger magnitude thanrises; falls by a larger magnitude thanremains unchanged; falls by a larger magnitude than

If NZD appreciate, how will NZ import change?radio_button_uncheckedImport increase, Import Payments increaseradio_button_uncheckedImport decrease, Import Payments decreaseradio_button_uncheckedImport increase, Import Payments decreaseradio_button_uncheckedImport decrease, Import Payments increaseSUBMIT

Suppose that the annual growth rate of nominal money supply is 1% in New Zealand and 5% in the Australia, and the annual growth rate of real GDP is 2% in New Zealand and 4% in Australia. According to the monetary model of exchange rate, the New Zealand dollar would __________ against the Australian dollar on an annual basis in the long run.