Expected future spot rates are based on relative inflation rates between two countries
举一反三
- _______ states that differential rates of inflation between two countries tend to be offset over time by an equal but opposite change in the spot exchange rate. A: The Fisher Effect B: The International Fisher Effect C: Absolute Purchasing Power Parity D: Relative Purchasing Power Parity
- Countries with the highest inflation rates are likely to have A: the highest rates of money growth B: small budget deficits relative to GDP C: the lowest interest rates D: all of the above
- Which<br/>of these states that the difference in interest rates between two<br/>countries is equal to the percentage difference between the forward<br/>exchange rate and the spot exchange rate?() A: Arbitrage<br/>equilibrium B: Relative<br/>purchasing power parity C: Absolute<br/>purchasing power parity D: Interest<br/>rate parity E: Cross-rate<br/>parity
- If interest rates are expected to rise in the future, the demand for long-term bonds _____ and the demand curve shifts to the _____.
- Interest rates that include an inflation premium are referred to as A: annual percentage rates B: effective annual rates C: real rates D: nominal rates