Which of the Following Provides the Link Between Interest Rate

question 104

Multiple Choice

Which of the following provides the link between interest rate parity and unbiased forward rates?

• A) Relative purchasing power parity.
• B) Triangle arbitrage.
• C) Exchange rate risk.
• D) Covered interest arbitrage.
• E) Uncovered interest parity.

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Definitions:

Tax Receipts

The income generated for a government through taxation, which can include revenue from individuals, corporations, and other taxes.

Budget Deficit

A situation where a government's expenditures exceed its revenues, leading to the need for borrowing or using saved reserves.

Marginal Propensity To Consume

The ratio of the change in consumption spending to the change in disposable income, indicating how much of additional income will be spent.

John Maynard Keynes

A UK-based economist who significantly transformed both the theoretical and practical aspects of macroeconomics, as well as the economic strategies executed by governments.