Interest Rate Parity Means That

question 61

Multiple Choice

Interest rate parity means that

• A)in equilibrium, interest rates adjust so that after adjustments for expected inflation and exchange rate risk, returns are equalized across countries.
• B)nominal interest rates tend to become equalized across countries over time.
• C)an inflation premium is added to nominal interest rates to insure purchasing power parity across countries.
• D)None of the above.

---

Definitions:

Multicultural

Pertaining to, or representing several different cultures or cultural elements, highlighting diversity and inclusion.

Social Action

Acts and behaviors intended to bring about change in societal norms, policies, or structures, often driven by collective or individual efforts.

Reducing Inequality

Reducing Inequality involves measures and actions aimed at decreasing the economic and social disparities between different populations or groups within society.

Gross Income

The total amount of money made in one year by a person, household, or family unit. Also known as money income at the Census Bureau.