Answer:
Domestic and foreign rates of return converge, as depreciation of the euro raises returns for U.S. investors who purchase euro-based assets.
Explanation:
When there is an increase in the quantity of money, it is made to be permanent and prices are adhesive, then in the short term the rate of exchange diminishes because the fall of the domestic nominal returns is relative to foreign returns, and traders expect a fall in future for exchange rates.
