You are required to:
1- Discuss and evaluate the factors that influence exchange rates.
2- Explain how each of the following conditions will affect the value of the krank, holding other things equal.
a) UK inflation has suddenly increased substantially, while country K’s inflation remains low.
b) UK interest rates have increased substantially, while country’s interest rates remain low. Investors of both countries are attracted to high interest rates
c)The UK income level increased substantially while country K’s income level has remained unchanged.
D)The UK is expected to impose a small tariff on goods imported from country K
3- Aggregate all of these impacts to develop an overall forecast of the krank’s movement against the pound
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