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If the inflation rate in country A is larger than the inflation rate in country B and both countries maintain a purely floating exchange rate
If the inflation rate in country A is larger than the inflation rate in country B and both countries maintain a purely floating exchange rate and free capital mobility, which of the following statements are expected to be approximately correct? Choose all that apply a The nominal interest rate will be higher in country A relative to country B b The inflationadjusted interest rate in country A will be higher than in country B c The currency of country A will be expected to depreciate relative to that of country B d The inflationadjusted interest rate in country A and B may remain the same.
If the inflation rate in country A is larger than the inflation rate in country B and both countries
maintain a purely floating exchange rate and free capital mobility, which of the following
statements are expected to be approximately correct? Choose all that apply
a The nominal interest rate will be higher in country A relative to country B
b The inflationadjusted interest rate in country A will be higher than in country B
c The currency of country A will be expected to depreciate relative to that of country B
d The inflationadjusted interest rate in country A and B may remain the same.
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