The theory that real interest rates are equal across countries is called:

Question

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The theory that real interest rates are equal across countries is called the international Fisher effect, which states that the difference in nominal interest rates between two countries is equal to the difference in their inflation rates, plus the expected change in their exchange rates. Uncovered interest rate parity (B) states that the difference in interest rates between two countries should be equal to the expected depreciation of the high-interest-rate currency against the low-interest-rate currency. The unbiased forward rates condition (A) states that the forward exchange rate should be an unbiased predictor of the future spot exchange rate. Purchasing power parity (D) states that the exchange rate between two currencies should be equivalent to the ratio of the two countries' price levels. Although interest rate parity (E) is related, it does not specifically address real interest rates being equal across countries.

The Theory That Real Interest Rates Are Equal Across Countries