What is the interest parity condition?
What will be an ideal response?
The condition that the expected returns on deposits of any two currencies are equal when measured in the same currency is called the interest parity condition. It implies that potential holders of foreign currency deposits view them as equally desirable assets, i.e. risk is assumed away.
In notational forms:
R$ = RE + ( - E$/E)/E$/E
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Heterogeneity and the dynamic nature of labor markets are the principal causes of ________ unemployment.
A. chronic B. cyclical C. structural D. frictional
The gross domestic product (GDP) of an economy for a particular year is likely to increase if _____
a. workers go on longer vacations during that year b. the length of an average work week decreases c. homeowners hire lawn care services rather than maintaining the lawns themselves d. people cook food at home instead of buying restaurant meals e. the sale of illegal drugs increases
If a university charged a lower price for tuition during summer school than during the regular session, in search of added total revenue,
a. administrators likely believe that demand is more elastic during summer school than during the regular session. b. administrators likely believe that demand is less elastic during summer school than during the regular session. c. it indicates nothing about likely differences in the elasticity of demand during summer school than during the regular session. d. administrators likely believe that demand is both lower and less elastic during summer school than during the regular session.
Refer to the graph shown. Which of the following curves demonstrates a perfectly elastic demand curve?
A. A B. B C. C D. None of the curves