Suppose the interest rate on six-month treasury bills is 7 percent per year in the United Kingdom and 4 percent per year in the United States. Also, today's spot exchange price of the pound is $2.00. If the price of the six-month forward pound is ________, U.S. investors would see no return difference between covered U.K. investment and domestic U.S. investment.
A. $1.94
B. $1.99
C. $1.97
D. $2.01
Answer: C
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Speculators who believe the world-wide demand for cocoa products is going to increase enormously next year will cause
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A) consumption spending B) autonomous consumption C) the marginal propensity to consume D) the marginal propensity to save
Are there any measurement problems that occur with the GDP calculation? Explain.
What will be an ideal response?