Multiple Choice
Which of the following theories suggests that the percentage change in the spot exchange rate of a currency should be equal to the inflation differential between two countries?
A) purchasing power parity (PPP)
B) triangular arbitrage
C) international Fisher effect (IFE)
D) interest rate parity (IRP)
Correct Answer:
Verified
Correct Answer:
Verified
Q2: Assume that the New Zealand inflation rate
Q3: Assume U.S. and Swiss investors require a
Q4: Which of the following theories suggests that
Q5: Assume a two-country world: Country A and
Q6: The relative form of purchasing power parity
Q8: If interest rate parity holds, then the
Q9: According to the IFE, when the nominal
Q10: The nominal interest rate can be measured
Q11: According to the international Fisher effect, if
Q12: Which of the following is not true