Because real interest rates are theoretically equal across countries, any difference in interest rates between two countries must be due to different expected rates of inflation.

Question

Quizplus · Accepted Answer

Real interest rates are determined by factors such as economic growth prospects, productivity, and capital availability, and are expected to be equal across countries with similar risks. However, differences in nominal interest rates between two countries can be due to expected differences in inflation rates.

Because Real Interest Rates Are Theoretically Equal Across Countries, Any