The Idea That the Exchange Rate Adjusts to Keep Buying

question 33

Multiple Choice

The idea that the exchange rate adjusts to keep buying power constant among currencies is called:

• A)interest rate parity.
• B)uncovered interest rate parity.
• C)purchasing power parity.
• D)the international Fisher effect.
• E)the unbiased forward rates condition.

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Definitions:

Threshold

The minimum level of stimulus intensity required to activate a sensory system or produce a response in a physiological or psychological system.

Inhibitory Stimulation

A neural process that decreases the likelihood of a neuron firing, thereby reducing or preventing certain neural activities.

Neurotransmitters

Chemical substances in the nervous system that transmit signals from one neuron to another across synapses.

Chemical Messengers

Substances in the body that transmit signals from one cell to another, typically hormones and neurotransmitters.