What would you expect to be the relationship between real rates of interest in Japan and the United States if inflation is expected to be 3% in Japan and 6% in the United States?
A) Japan's real interest rate should be 3% higher than in the United States.
B) Japan's real interest rate should be 3% lower than in the United States.
C) Japan's real interest rate should be half as high as in the United States.
D) Real interest rates should be equal in both countries.
Correct Answer:
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