According to the international Fisher effect, if Venezuela has a much higher nominal rate than other countries, its inflation rate will likely be ____ than other countries, and its currency will ____.

Question

Quizplus · Accepted Answer

According to the international Fisher effect, if a country has a higher nominal interest rate than other countries, its currency is likely to weaken because of the expectation that the country's inflation rate will also be higher. Therefore, the correct option is C, as Venezuela's inflation rate will likely be higher than other countries, thus weakening its currency.

According to the International Fisher Effect, If Venezuela Has a Much