Expected Interest-Rate Parity Predicts That

question 63

Multiple Choice

Expected interest-rate parity predicts that:

• A)countries with relatively higher inflation can expect a depreciation in the value of their currency
• B)countries with relatively lower inflation can expect a depreciation in the value of their currency
• C)countries with relatively higher interest rates can expect an appreciation in the value of their currency
• D)countries with relatively higher interest rates can expect a depreciation in the value of their currency
• E)countries with relatively higher inflation can expect an appreciation in the value of their currency.

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Definitions:

Power Outage

A temporary loss of electrical power in a particular area, which can be due to several reasons including technical failures or maintenance work.

Rim

The outer edge of a circular object, such as a wheel or a basketball hoop.

Puncture

A small hole made by a sharp object in a surface.

Inflate

To cause to increase in size, volume, or importance, sometimes referring specifically to the increase of prices or the expansion of economic bubbles.