The International Fisher Effect implies that ________.
A)the country with the higher interest rate should have lower inflation
B)the currency of the country with the lower interest rate will strengthen in the future
C)the currency of the country with the higher interest rate will strengthen in the future
D)interest rates and inflation are not linked at all

Question

Quizplus · Accepted Answer

The International Fisher Effect suggests that the currency of the country with the lower interest rate will appreciate in the future relative to the currency of the country with the higher interest rate, due to expected differences in inflation rates.

The International Fisher Effect Implies That ________