According to the international Fisher effect, if investors in all countries require the same real rate of return, the differential in nominal interest rates between any two countries:

Question

Quizplus · Accepted Answer

The international Fisher effect (IFE) states that the differential in nominal interest rates between two countries is equal to the difference in their inflation rates. This relationship arises due to the tendency of exchange rates to adjust to offset the inflation differential between countries. Therefore, choice B is the correct answer.

According to the International Fisher Effect, If Investors in All