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Q. Explain the purpose of the following figure. Show the effects of German unification on Germany's interest rate.
Answer: The major purpose is to show that different interest rates exist for different assets since foreign currencies are different assets. From 1990 to 1995 the DM interest rate is elevated than that of the United States. Exclusive of this period the dollar rates are higher reflecting higher inflation in the United States and depreciating of the dollar versus the German currency.
Hello, I rent an appartment in Brazil, a country known for its high inflation rates, but I live in Switzerland. Does this mean when I exchange Reais to Swiss Francs (in a +- consta
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