Which of the Following Is a Theory That the Difference

question 86

Multiple Choice

Which of the following is a theory that the difference in interest rates between two countries is equal to the difference between the forward currency exchange rate and the spot exchange rate?

• A) Purchasing power parity
• B) Interest rate parity
• C) Law of one price
• D) Currency swap parity

---

Definitions:

Atypical Members

Members of a category that do not conform to the typical characteristics or expectations of that category.

Knowledge-based Approach

A strategy or method that relies on using existing knowledge or information as a foundation for decision-making or problem-solving.

Similarity

The degree to which two or more objects, ideas, or concepts are alike or share common features, which can influence cognitive processes like categorization and memory recall.

Script

A sequence of expected behaviors for a given situation, often acting as a guide for social interaction or task execution.