If the international Fisher effect is valid,then expected real interest rates in all countries should be equal.

Question

Quizplus · Accepted Answer

The international Fisher effect states that differences in nominal interest rates between two countries should be reflected in their exchange rate over time, as investors seek higher returns in the country with the higher nominal interest rate. This means that if two countries have the same expected inflation rate, their real interest rates should be the same. Therefore, the statement is true.

If the International Fisher Effect Is Valid,then Expected Real Interest