According to Interest Rate Parity (IRP)

question 28

Multiple Choice

According to interest rate parity (IRP) :

• A) the forward rate differs from the spot rate by a sufficient amount to offset the inflation differential between two currencies.
• B) the future spot rate differs from the current spot rate by a sufficient amount to offset the interest rate differential between two currencies.
• C) the future spot rate differs from the current spot rate by a sufficient amount to offset the inflation differential between two currencies.
• D) the forward rate differs from the spot rate by a sufficient amount to offset the interest rate differential between two currencies.

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Definitions:

Personal Income

The total amount of income received by an individual from all sources, including wages, salaries, investments, and other earnings.

Income Distribution

The way in which total income is shared among individuals or groups of people in an economy.

Economic Pie

A metaphorical representation of the total amount of wealth or resources available within an economy, with its distribution among individuals or groups being a central economic concern.