Problem
Suppose that the nominal interest rate on 3- month Treasury bills is 8 percent in the United States and 6 percent in the United Kingdom, and the rate of inflation is 10 percent in the United States and 4 percent in the United Kingdom.
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?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.