If Changes in the Exchange Rate Are Determined by the Difference

question 189

Multiple Choice

If changes in the exchange rate are determined by the difference in inflation rates between two countries then ________________ holds.

• A) Relative purchasing power parity.
• B) Interest rate parity.
• C) The unbiased forward rates hypothesis.
• D) Uncovered interest parity.
• E) Triangle arbitrage.

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Definitions:

Recommended Daily Allowances

Nutritional daily intake levels considered sufficient to meet the nutrient requirements of nearly all healthy individuals in a population.

Triglycerides

A type of fat found in the blood, used by the body for energy; high levels can increase the risk of heart disease.

Fatty Acids

Essential, long-chain hydrocarbons found in fats and oils, important for energy and cell functions.

Polyunsaturated

A type of fat found in plants and fish that contains more than one unsaturated carbon bond in its molecules, known to be beneficial for heart health.