The interplay between interest rate differentials and exchange rates - 4535

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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. purchasing power parity theory. 

B. balance of payments quantum theory. 

C. arbitrage markets theory. 

D. interest rate parity theory. 

 
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The interplay between interest rate differentials and exchange