When Interest Parity Holds _____

question 92

Multiple Choice

When interest parity holds _____.

• A) the effectiveness of fiscal policy is reduced
• B) the nominal exchange rate between all currencies is equal
• C) interest rate differentials are offset by exchange rate differentials
• D) there will be huge inflation rate differentials in countries across the world

---

Definitions:

Dependent Variable

The variable in a study or model that is affected by changes in other variables (independent variables), often representing the outcome or effect being investigated.

Independent Variable

An element or factor in an experiment that is manipulated or changed to observe its effects on the dependent variable.

Quantitative Forecasting

A method of predicting future events or trends based on numerical data and statistical techniques.

Human Capital

The collective skills, knowledge, and experience possessed by an organization's workforce, viewed as a significant asset.