The interplay between interest rate differentials and exchange rates - 2324

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The interplay between interest rate differentials and exchange rates such that both adjust until the foreign exchange market and the money market reach equilibrium is called the:

A.   interest rate parity theory.

B.   balance of payments quantum theory.

C.   arbitrage markets theory.

D.   purchasing power parity theory.

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The interplay between interest rate differentials and exchange rates such that both