Question
Suppose that interest rate,i for France and Switzerland is 1.7% and expected inflation rate in France is 0.8% and in Switzerland is 0.5%. a. compute
Suppose that interest rate,i for France and Switzerland is 1.7% and expected inflation rate in France is 0.8% and in Switzerland is 0.5%.
a. compute the real interest rate for both countries using the exact formula.
b. compute the real interest rate for both countries using approximation formula.
c. explain the difference between interest rate for both France and Switzerland countries.
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Economics of Strategy
Authors: David Besanko, David Dranove, Mark Shanley, Scott Schaefer
6th edition
978-1118273630, 111827363X, 978-1118319185
