A Command Economy Is One in Which a Central Government

question 29

True/False

A command economy is one in which a central government sets output targets, incomes, and prices.

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Definitions:

Interest Rate Parity

An economic theory stating that the difference in interest rates between two countries is equal to the expected change in exchange rates between their currencies.

Unbiased Forward Rates

Financial theory suggesting that forward exchange rates should be an unbiased predictor of future spot exchange rates.

Covered Interest Arbitrage

An investment strategy that involves exploiting the interest rate differential between two countries while using forward contracts to hedge against currency risk.

Eurobonds

International bonds issued in a currency not native to the country where it is issued, allowing companies to raise capital in a foreign currency.