The interplay between interest rate differentials and exchange rates such that - 4029

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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. 

balance of payments quantum theory.

B. 

interest rate parity theory.

C. 

purchasing power parity theory.

D. 

arbitrage markets theory.

 
Solution Description

 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: