It Has Been Abundantly Demonstrated That Nominal Interest Rates, Exchange

Essay

It has been abundantly demonstrated that nominal interest rates, exchange rates, and inflation are very tightly linked. In Italy, during the 1970s and 1980s, the inflation rate of the Italian lira was very erratic, changing each year in a range of 7% to 20% per year. Predict the effect on Italy's nominal interest rates and its exchange rates with other nations during that period.