6. Inflation, interest rates, and exchange
rates
Relative inflation rates affect interest rates, exchange rates,
the overall economic health of a country, and the operations and
profitability of multinational companies.
Consider the following statement:
Countries with lower inflation rates will have lower interest
rates.
Based on your understanding of the relationship between relative
inflation rates and exchange rates, identify whether the preceding
statement is valid or invalid.
The statement is valid, because the nominal interest rate is the
sum of...