Which of the following is a feature of the 'Interest Rate Parity' conditions?
A. They apply only to real interest rates
B. They link interest rates and expected or forward exchange-rate changes across countries
C. They determine only domestic interest rates
D. They are independent of exchange rates
Answer: Option B
Solution (By JKSSB Mock Tests)
Both covered and uncovered interest parity conditions relate the interest differential between two countries to the forward premium or the expected change in the exchange rate.
Explanation:
MFN principle under WTO requires that any advantage granted to one member country must be extended to all other members, ensuring non-discrimination.
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