According to the international fisher effect, if the forward premium on a country's currency is shrinking, this must mean that
A. the country's nominal interest rate is falling because the country's inflation rate is expected to fall
B. the country's nominal interest rate is rising because the country's inflation rate is expected to fall
C. the country's nominal interest rate is falling because the country's inflation rate is expected to rise
D. the country's nominal interest rate is rising because the country's inflation rate is expected to rise
Answer: D. the country's nominal interest rate is rising because the country's inflation rate is expected to rise