Inflation Rates Multiple Choice Questions with Answers – PDF Download

MCQ 1: The theory according to which the difference between expected appreciation and foreign interest must be equal to domestic interest rate, is called:

1. interest rate parity theorem
2. appreciation parity theorem
3. domestic parity theorem
4. foreign interest parity theorem

MCQ 2: The rule which states that similar set of goods and services produced in various countries should have equal price is classified as:

1. law of similar mortgage rate
2. law of one type manufacturing
3. law of similar labor rules
4. law of one price

MCQ 3: In equilibrium position, the spread between foreign and domestic rate of interest must be equal to spread of:

1. domestic rates
2. forward and spot exchange rates
3. forward rate
4. spot rates

MCQ 4: The theory which considers the change in exchange rate with the fluctuations in inflation rates is classified as:

1. liquidated power parity
2. purchasing power parity
3. selling power parity
4. volatile power parity

MCQ 5: The inflation rate in United States is added into real rate of interest to calculate:

1. quoted interest rate in United States
2. nominal interest rate in United States
3. interest rate in United States
4. discount rate of country