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What Would You Expect to Be the Relationship Between Real

Question 4

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What would you expect to be the relationship between real rates of interest in Japan and Canada if inflation is expected to be 3% in Japan and 6% in Canada?


A) Japan's real interest rate should be 3% higher than in Canada.
B) Japan's real interest rate should be 3% lower than in Canada.
C) Japan's real interest rate should be half as high as in Canada.
D) Real interest rates should be equal in both countries.

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