According to the international Fisher effect,if U.S.investors expect a 5% rate of domestic inflation over one year,and a 2% rate of inflation in European countries that use the euro,and require a 3% real return on investments over one year,the nominal interest rate on oneyear U.S.Treasury securities would be:

Question

Quizplus · Accepted Answer

The nominal interest rate is calculated by adding the expected inflation rate to the required real return. Here, 5% (domestic inflation) + 3% (real return) = 8%.

According to the International Fisher Effect,if U