Interest rate parity occurs when
A) interest rates are equal across nations.
B) interest rate differentials are always maintained across nations.
C) interest rates no longer affect the exchange rate.
D) prices are equal across nations when exchange rates are taken into account.
E) the interest rate in one currency equals the interest rate in another currency when exchange rate changes are taken into account.
The figure above shows the demand curve for dollars in the foreign exchange market.
Question 2
What effect does an increase in real GDP have on the demand for money?
What will be an ideal response?
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