Interest rate affects the investment patterns in economy

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The interest rate affects the investment patterns in the economy. A friend of yours suggests a get-rich-quick scheme: Borrow from the nation with the lower nominal interest rate, invest in the nation with the higher nominal interest rate, and profit from the interest-rate differential.

Do you see any potential problems with this idea? Explain.

What are the cons of the strategy?

Reference no: EM13859912

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