If all of the parity conditions hold,then a real interest rate in the U.S.of 5% should be equal to ________ in another country when 3% inflation is expected in the U.S.

Question

Quizplus · Accepted Answer

When all parity conditions hold, the real interest rate should be equal across countries. This means that if the U.S. has a real interest rate of 5%, the same should apply to another country, regardless of the inflation rate.

If All of the Parity Conditions Hold,then a Real Interest