Which of the Following Is a Theory That the Difference

question 86

Multiple Choice

Which of the following is a theory that the difference in interest rates between two countries is equal to the difference between the forward currency exchange rate and the spot exchange rate?

• A) Purchasing power parity
• B) Interest rate parity
• C) Law of one price
• D) Currency swap parity

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Definitions:

Domestic Price

The price of goods or services within a country's borders, influenced by local demand and supply conditions.

Shoes

Footwear created to protect and comfort the human foot while doing various activities, also serving as an item of decoration or fashion.

Export

Goods or services produced in one country and sold to buyers in another country.

Baskets

Containers typically made of interwoven materials like straw or plastic, used for carrying or storing items.