the economics of money, banking, and financial markets

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© 2014 Pearson Canada Inc.#

12. Explain the interest parity condition.
    Answer: The domestic interest rate equals the foreign interest rate minus the expected
    appreciation of the domestic currency.
    Diff: 1 Type: SA Page Ref: 491
    Skill: Recall
    Objective List: 19.4 Understand the factors that change the exchange rate