The One-Year Forward Exchange Rate Is Rupees 40

question 59

Multiple Choice

The one-year forward exchange rate is Rupees 40/$. If the one-year interest rate in the United States is 4% and in India is 7%, what is the spot exchange rate so as to preclude arbitrage?

• A) Rupees 38.88/$
• B) Rupees 39.01/$
• C) Rupees 39.23/$
• D) Rupees 39.32/$

Grasp the historical debates surrounding the Phillips curve and its policy implications.

Understand the relationship between money supply growth, inflation, and unemployment in the long run.

Grasp the effects of supply shocks on inflation, unemployment, and the aggregate supply curve.

Learn about the natural rate of unemployment and its determinants.

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Reward

An incentive or benefit given for some form of achievement, effort, or behavior, aimed at encouraging or reinforcing certain actions.

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The way individuals exhibit or portray themselves in various situations, often influenced by social norms and personal objectives.

Social Comparison Theory

A theory suggesting people determine their own social and personal worth based on how they stack up against others.