(20.4) In response to a 1% increase in inflation, the central bank raises nominal interest rates by 1%. Use UIP and PPP to work out what should happen to the current spot rate. How would your answer...

(20.4) In response to a 1% increase in inflation, the central bank raises nominal interest rates by 1%. Use UIP and PPP to work out what should happen to the current spot rate. How would your answer differ if the central bank raised rates by 2%? Why?