Investment flows have on the dollar exchange value

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Suppose that the nominal interest rate on three-month Treasury bills is 8 percent in the U.S. and 6 percent in the U.K., and the rate of inflation is 10 percent in the U.S. and 4 percent in the U.K. a. What is the real interest rate in each nation? b. In which direction would international investment flow in response to these real interest rates? c. What impact would these investment flows have on the dollar's exchange value?

Reference no: EM13979249

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