21.   What is the break-even inflation rate?

22.   Instead, the theory is usually expressed in terms of changes in price levels in different countries, that is, in terms of differential inflation rates.

23.   With this version of the theory, the change in the exchange rate over a period will equal the differential inflation rates between the two countries.

24.   This says that the expected rate of appreciation of the exchange rate increases with the expected US inflation rate and decreases with the expected UK inflation rate.

25.   Equation says that the percentage forward premium increases with the expected US inflation rate and decreases with the expected UK inflation rate.

26.   The nominal interest rate in the UK is higher than in the USA because the expected inflation rate is higher.

27.   The British rate of inflation was significantly higher than the inflation rates of its main competitors.

28.   Simultaneously, it aimed at the permanent reduction of inflation rates in the EC as the means of promoting price predictability.

29.   In such a union, there will exist a single union inflation rate, common to all member countries.

30.   It suggests that the benefits of an inefficient fiscal system exceed the costs of high inflation rates.