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Suppose that the nominal interest rate in the euro area is 2%, and the nominal interest rate in Switzerland is 4%. Suppose inflation is expected
Suppose that the nominal interest rate in the euro area is 2%, and the nominal interest rate in Switzerland is 4%. Suppose inflation is expected to be 0.5% in the euro area. If the Fisher Effect holds, then the real interest rate in the euro area is approximately the expected inflation in Switzerland is and 2%; impossible to determine. O 1.5%; 2.5% 0 2.5%; 0.596 0 None of the above is correct. 1.5% 0.5%
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