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(Ch. 8) Interpreting Inflationary Expectations. If investors in the United States and Mexico require the same real interest rate, and the nominal rate of interest

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(Ch. 8) Interpreting Inflationary Expectations. If investors in the United States and Mexico require the same real interest rate, and the nominal rate of interest is 5 percent higher in Mexico, what does this imply about expectations of U.S. inflation and Mexican inflation? What do these inflationary expectations suggest about future exchange rates? (5 points)

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