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Answer the following questions : Q1. Is the Interest Parity relationship (IP) based on the Current-Account or Financial (capital) Account? Answer in ONE line. Q2.

Answer the following questions :

Q1. Is the Interest Parity relationship (IP) based on the Current-Account or Financial (capital) Account? Answer in ONE line.

Q2. ) Theoretically, does IP hold when international capital is not perfectly mobile? Why yes or no? Answer in brief . No equation is required.

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