According to Interest Rate Parity (IRP):​

question 35

Multiple Choice

According to interest rate parity (IRP) :​

• A) ​the forward rate differs from the spot rate by a sufficient amount to offset the inflation differential between two currencies.
• B) ​the future spot rate differs from the current spot rate by a sufficient amount to offset the interest rate differential between two currencies.
• C) ​the future spot rate differs from the current spot rate by a sufficient amount to offset the inflation differential between two currencies.
• D) ​the forward rate differs from the spot rate by a sufficient amount to offset the interest rate differential between two currencies.

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Definitions:

Aggregate Supply Curve

A visual depiction illustrating the aggregate amount of products and services that suppliers in an economy are prepared and capable of offering across various price points.

Keynes

Concerns John Maynard Keynes, a British economic theorist whose concepts transformed the study and application of macroeconomics as well as state economic policy.

Investment Expenditures

Spending by businesses or individuals on capital assets that are expected to yield benefits or profits over the long term.

Interest Rates

The percentage of a sum of money charged for its use, typically by a bank to borrowers.