Suppose the interest rate in France is 1. 7%, and the expected French inflation is (0.8 %).

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Suppose the interest rate in France is 1. 7%, and the expected French inflation is $0.8 \%$. The Swiss interest rate is also $1.7 \%$ and the expected Swiss inflation is $0.5 \%$.

a. What are the exact real interest rates in France and Switzerland?

b. What are the approximate real interest rates in France and Switzerland?

c. How do you explain the difference in real rates between France and Switzerland?

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Macroeconomics

ISBN: 9781292160504

7th Global Edition

Authors: Olivier J. Blanchard

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Question Posted: Feb 29, 2024 03:01 AM

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Suppose the interest rate in France is 1. 7%, and the expected French inflation is (0.8 %).

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Real Interest Rates in France and Switzerland a Exact Real Interest Rates To calculate the real inte...View the full answer

Macroeconomics

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