Question

g The international Fisher effect: Group of answer choices is an example of absolute PPP focuses on changes over time in the relative price of traded baskets of goods and services between two countries none of the answers is correct is the difference in nominal interest rates across countries reflecting the difference in expected rates of inflation in those countries explains how the financial market prices one country's currency in terms of another's

Answer 1

The international Fisher effect is the difference in nominal interest rates across countries reflecting the difference in expected rates of inflation in those countries.

What does the Fisher effect show?

It shows that the nominal rate of interest in a nation usually follows the inflation rate because an inflation-adjusted rate needs to be formed.

This then leads to a change in exchange rates between countries because the difference in nominal rates shows the difference in inflation which is what devalues or appreciates a currency.

Find out more on the fisher effect at brainly.com/question/16036767.

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