The International Fisher Effect ________.
A)links interest rates and inflation
B)implies that the currency of the country with the lower interest rate will weaken in the future
C)implies that the country with the higher interest rate should have lower inflation
D)links interest rates and exchange rates

Question

Quizplus · Accepted Answer

The International Fisher Effect links interest rates and exchange rates, suggesting that currencies of countries with higher interest rates should appreciate relative to those with lower interest rates.