MICROECONOMICS
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ISBN: 9780134519494
Author: Acemoglu
Publisher: PEARSON
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Chapter 15, Problem 6P
To determine
The interest rate on bond and the relationship between price and interest rate.
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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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