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Q. What is the interest parity condition?
Answer: The circumstance that the expected returns on deposits of any two currencies are equal when measured in the same currency is called the interest parity condition. It involve that potential holders of foreign currency deposits view them as equally desirable assets that is risk is assumed away. In the notational forms:
R$ = RE + (Ee $/E - E$/E) / E$/E.
WHY IS INTERNATIONAL TRADE IMPORTANT FOR SOUTH AFRICA
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why is international trade important for south africa
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Q. How can long-run values in the real exchange rate change? Answer: A elevate in world relative demand for U.S output origins a long-run real appreciation of the dollar
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