For this question, assume the interest parity conditions holds. Also assume that the domestic interest rate is 10% and that the foreign interest rate is 7%. Given this information, we would expect that
A) individuals will only hold foreign bonds.
B) individuals will only hold domestic bonds.
C) the domestic currency is expected to appreciate by 3%.
D) the domestic currency is expected to depreciate by 3%.
D
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Some economists have suggested that network externalities result in consumers being locked into the use of products with inferior technologies
Economists Stan Leibowitz and Stephen Margolis have studied cases that have been cited as examples of this and found A) that consumers use products with inferior technologies when their prices are lower than products with superior technologies. B) that in all of these cases network externalities resulted in market failure. C) there is no convincing evidence that the alternative technologies were superior. D) consumers sometimes do become locked into the use of products with inferior technologies.
Holding other things constant, a decrease in the inflation rate in the US compared to the Canadian economy will cause the demand for the Canadian dollar to _____________ and the supply to __________
a. Increase; decrease b. Increase, increase c. Decrease; Increase d. Decrease; Decrease
If Xavier can produce sandwiches at a lower opportunity cost than Kimani, then
a. Xavier has a comparative advantage in the production of sandwiches. b. Kimani has a comparative advantage in the production of sandwiches. c. Xavier should not produce sandwiches. d. Xavier is capable of producing more sandwiches than Kimani in a given amount of time.
"Many Americans have been hurt by recent economic events. Raising the minimum wage is the best policy to improve the wages and employment opportunities of Americans." This argument is
a. correct because a higher minimum wage will increase total income which will stimulate aggregate demand and employment. b. incorrect because while some people will receive higher wages, others will experience less employment and fewer training opportunities. c. incorrect because the government has too big a deficit to pay for the increase in the minimum wage. d. correct because most minimum wage workers are household heads trying to earn enough to support their family.