If international Fisher effect (IFE) holds real exchange rates will be equal across the two countries interest rates will be able to forecast exchange rates inflation rates will be able to forecast exchange rates inflation rates will be equal across the two countries

If international Fisher effect (IFE) holds real exchange rates will be equal across the two countries interest rates will be able to forecast exchange rates inflation rates will be able to forecast exchange rates inflation rates will be equal across the two countries

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter31: Open-Economy Macroeconomics: Basic Concepts

Section31.2: The Price For International transaction: Real And Nominal Exchange Rate

Problem 2QQ

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Question

If international Fisher effect (IFE) holds
real exchange rates will be equal across the two countries
interest rates will be able to forecast exchange rates
inflation rates will be able to forecast exchange rates
inflation rates will be equal across the two countries

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