If an investor starts with dollars and wants to end up with dollars in the future, which of the following is NOT an investment choice that he can make?
A. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and then, buy dollars at the future spot rate
B. Buy a dollar-denominated financial asset
C. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy the foreign currency
D. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy dollars
Answer: C
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Refer to Table 6-2. Assume that an economist has estimated the price elasticity of demand values in the table above. Use the data in the table to select the correct statement
A) The difference in elasticity values is explained by the fact that the more narrowly we define a market the more elastic the demand will be. B) There are fewer substitutes for "All carbonated soft drinks" than there are for "All soft drinks." C) The elasticity for "All soft drinks" is less than the elasticity for Coca-Cola because Coca-Cola is more of a luxury than a necessity; "All soft drinks" represent goods that are more necessity than luxury. D) The demand for Coca-Cola is inelastic.
The absolute value of the price elasticity of demand at the midpoint of a linear demand curve is always
a. greater than one b. less than one c. one d. zero e. infinity
Jack is traveling to Southeast Asia, Mariko has planned a visit to the Amazon, and Joe has to travel to Seattle for an advertising campaign. In the given scenario, which of the following statements is true?
a. Jack should use credit cards, Mariko should use traveler's checks, and Joe should use cash. b. Jack should use traveler's checks, Mariko should use credit cards, and Joe should use cash. c. Jack should use cash, Mariko should use traveler's checks, and Joe should use credit cards. d. Jack should use traveler's checks, Mariko should use cash, and Joe should use credit cards.
Based on the graph for saving incentives, when a new tax law makes the supply shift from S1 to S2, the real interest rate would ______.
a. remain at r1
b. remain at r2
c. rise from r2 to r1
d. drop from r1 to r2