People expect an inflation rate of 5 percent and the real interest rate is positive. Consequently the nominal interest rate will be
A) more than 5 percent.
B) 5 percent.
C) less than 5 percent.
D) Without more information it is impossible to tell if the nominal interest rate will be more than, less than, or equal to 5 percent.
A
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Purchases of foreign assets by U.S. residents are tabulated in the U.S. balance of payments as a:
a. capital inflow. b. capital outflow. c. current account outflow. d. unilateral transfer.
As the expected future spot rate moves closer to the spot rate, uncovered interest parity indicates that:
a. interest rates should remain constant. b. interest rates should converge. c. interest rates should diverge. d. The answer depends on whether the expected future spot rate is higher or lower than the spot rate.
Refer to the table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out?Units ofActivity TotalCostTotalBenefit0$0$01$2$122$6$223$12$304$20$365$30$406$42$427$56$43
A. 3 B. 5 C. 2 D. 4