Assume that the U.S. and Chile nominal interest rates are equal. Then, the U.S. nominal interest rate decreases while the Chilean nominal interest rate remains stable. According to the international Fisher effect, this implies expectations of ____ than before, and that the Chilean peso should ____ against the dollar.

Question

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According to the international Fisher effect, a decrease in the U.S. nominal interest rate suggests expectations of lower U.S. inflation. Consequently, the Chilean peso should depreciate against the dollar as the U.S. currency becomes relatively stronger.

Assume That the U