If the home interest rate is 5% and the foreign interest rate is 7%, then the difference in the expected inflation rates is:

Question

Quizplus · Accepted Answer

The difference in the expected inflation rates can be calculated by subtracting the foreign inflation rate from the home inflation rate. However, the question only provides information about the interest rates and not the specific inflation rates. In general, higher interest rates can signify higher inflation rates, but the relationship is not always straightforward. Therefore, we cannot accurately determine the inflation rate difference based on the information given in the question.

If the Home Interest Rate Is 5% and the Foreign