Posted by **Anonymous** on Tuesday, October 4, 2011 at 6:49pm.

The nominal interest rate is 12 percent per year in Canada and 8 percent per year in the United States. Suppose that the real interest rates are equalized in the two countries and that purchasing-power parity holds.

What can you infer about expected change in the exchange rate between the Canadian dollar and the U.S. dollar?

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