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

The international Fisher effect suggests that the currency of a country with a higher nominal interest rate will depreciate over time as investors demand a higher return to compensate for the higher inflation rate. Therefore, if Venezuela has a much higher nominal interest rate than other countries, its currency will likely weaken compared to the currencies of other countries, and its inflation rate will likely be higher than other countries.

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