What effects do relative inflation rates have on relative interest rates?

What effects do relative inflation rates have on relative interest rates?

Category:
0
0

What effects do relative inflation rates have on relative interest rates?

Answer and ExplanationSolution by a verified expert
Explanation Interest rates largely depend on inflation. To bring inflation down, governments will reduce the money supply by increasing the real interest rates. So a high relative inflation rate m...

Explanation

Interest rates largely depend on inflation. To bring inflation down, governments will reduce the money supply by increasing the real interest rates. So a high relative inflation rate means high relative interest rates,and a low relative inflation means low relative interest rates.

Verified Answer

High domestic inflation means high domestic interest rate; low domestic inflation means low domestic interest rates.

Purchase this answer to view it.
Login or register for free to purchase this solution with PayPal or credit cards securely


Get help with your essays and assignments

Order custom essays from top writers and get a professional paper delivered to your email on time.

Do my Paper