(Answered) In early 1996 the short-term interest rate in france was 37

Finance

In early 1996, the short-term interest rate in France was 3.7% and forecast French inflation was 1.8%. At the same time, the short-term German interest rate was 2.6% and forecast German inflation was 1.6%.

a. Based on these figures, what were the real interest rates in France and Germany?

b. To what would you attribute any discrepancy in real rates between France and Germany?

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