Which of the Following Is a Key Characteristic of Economic

question 15

Multiple Choice

Which of the following is a key characteristic of economic freedom?

• A)institutions and policies supportive of voluntary exchange
• B)freedom to compete
• C)protection of people and their property from aggressors
• D)all of the above

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Definitions:

Interest Rate Parity

A theory stating that the difference in interest rates between two countries is equal to the expected change in exchange rates between those countries' currencies.

Covered Interest Arbitrage

An investment strategy that involves taking advantage of the interest rate differential between two countries while hedging against exchange rate risk.

Risk-Free Profits

Profits made through investment strategies that are supposed to incur no risk to the investor.

Interest Rate Parity

A financial theory stating that the difference in interest rates between two countries will be offset by changes in the exchange rate between their currencies.