Suppose the price of a basket of goods costs $25 in country x and ¥300 in country y. suppose the price level in country x and y is expected to rise by 5% and 10%,respectively, in next year. ​​​​​​​If the current interest rate in country X is 10%, what would you expect the interest rate to be in country y?

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter13: Inflation
Section: Chapter Questions
Problem 12SQ
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Suppose the price of a basket of goods costs $25 in country x and ¥300 in country y. suppose the price level in country x and y is expected to rise by 5% and 10%,respectively, in next year. ​​​​​​​If the current interest rate in country X is 10%, what would you expect the interest rate to be in country y?

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