Textbook Problem

Interest Rates among Countries As of today, the interest rates in Countries X, Y, and $Z$ are similar. In the next month, Country $X$ is expected to have a weak economy, while Countries Y and Z are expected to experience a 6 percent increase in their economic growth. However, conditions this month will also increase the credit risk of borrowers in Country Z in the next month because of political concerns, while the credit risk of Countries X and Y remains unchanged. During the next month, which country should have the highest interest rate? Which country should have the lowest interest rate?