If Both Interest Rate Parity and the International Fisher Effect

question 38

Multiple Choice

If both interest rate parity and the international Fisher effect hold, then between the forward rate and the spot rate, the ____ rate should provide more accurate forecasts for currencies in ____-inflation countries.​

• A) ​spot; high
• B) ​spot; low
• C) ​forward; high
• D) ​forward; low

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