# Economics

posted by .

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?

## Similar Questions

1. ### Economics

If the velocity of circulation is constant, real GDP is growing at 3 percent a year, the real interest rate is 2 percent a year, and the nominal interest rate is 7 percent a year. a)What is the inflation rate?
2. ### Macroeconomics

You read in a newspaper that 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 …
3. ### Macroeconomics

You read in a newspaper that 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 …
4. ### Economics

You read in a newspaper that 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 …
5. ### Economics

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. A friend proposes …
6. ### Econ

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. A friend proposes …
7. ### Economics

The formula given was: (real rate of interest) = (nominal rate of interest) - (expected rate of inflation) A chartered bank offers a one-year loan at "3 points above prime." Prime is 4 per cent. a) What is the nominal interest rate?
8. ### FINANCE

2. Interest rates A two-year Treasury security currently earns 5.25 percent. Over the next two years, the real interest rate is expected to be 3.00 percent per year and the inflation premium is expected to be 2.00 percent per year. …
9. ### Need help by tonite FINANCE

2. Interest rates A two-year Treasury security currently earns 5.25 percent. Over the next two years, the real interest rate is expected to be 3.00 percent per year and the inflation premium is expected to be 2.00 percent per year. …
10. ### Economics

Suppose you borrow \$100 of principal that must be repaid at the end of two years, along with interest of 4 percent per year. If the annual inflation rate turns out to be 8 percent, (a) What is the real rate of interest on the loan?

More Similar Questions