Sophia is an exporter of designer and exclusive furniture from Nevada. Her business earns stable profits, as the interest rate has more or less remained unchanged in the past several years. However, mid-quarter, the Federal Reserve hikes the interest rate. What impact do you think will the change in interest rates have on her profits? A.
The exchange rate will depreciate, leading to a decline in her profit margin.
B.
The exchange rate will remain stable, leading to a rise in her profit margin.
C.
The exchange rate will depreciate, leading to a rise in her profit margin.
D.
The exchange rate will appreciate, leading to a rise in her profit margin.