When the "Real" Interest Rate Is Relatively Low in a Given

question 53

Multiple Choice

When the "real" interest rate is relatively low in a given country, then the currency of that country is typically expected to be:​

• A) ​weak, since the country's quoted interest rate would be high relative to the inflation rate.
• B) ​strong, since the country's quoted interest rate would be low relative to the inflation rate.
• C) ​strong, since the country's quoted interest rate would be high relative to the inflation rate.
• D) ​weak, since the country's quoted interest rate would be low relative to the inflation rate.

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Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an asset at a specified price within a specified time.