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:

Resource

An economic or productive factor required to accomplish an activity, or to produce goods and services.

Economists

Professionals who study the production, distribution, and consumption of goods and services, and analyze economic issues and behaviors.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit, such as purchasing assets or stocks.

Economic Term

A concept or terminology used within the field of economics to describe processes, theories, or phenomena related to how goods and services are produced, distributed, and consumed.