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If Inflation in the United States Is 4% Per Year

Question 6

Multiple Choice

If inflation in the United States is 4% per year and in the United Kingdom it is 8% per year, and interest rate in the United Kingdom is 6%, then the Fisher effect predicts that the interest rate in the United States is:


A) 2%.
B) 4%.
C) 6%.
D) 8%.

Correct Answer:

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