Whenever nations remove capital controls on their currencies:
a. returns are equalized and arbitrage opportunities disappear.
b. there is no opportunity for trade or arbitrage, and differences in returns disappear.
c. the government sets the returns on its currency, so traders cannot make profits.
d. in those nations, because government has ensured its safety, capital is free to move.
Ans: b. there is no opportunity for trade or arbitrage, and differences in returns disappear.
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Suppose you learn that in 1900, households spent about 40 percent of their budget on food, and today, they spend about 10 percent of their budget of food. All else equal, this suggests that the price elasticity of demand for food:
A. is probably negative. B. is probably higher now than it was in 1900. C. is probably lower now than it was in 1900. D. has always been very high.
Collaborative research is especially important in high-technology sectors because a single firm might not have the resources to develop a significant innovation.
Answer the following statement true (T) or false (F)
________ occur when the average total cost falls as the quantity produced increases
A) Increasing marginal returns B) Decreasing marginal returns C) Economies of scale D) Diseconomies of scale
A reserve requirement of 50 percent means a money multiplier of: a. 0.50. b. 2
c. 5. d. 50.