In equilibrium, if both covered interest parity and uncovered interest parity hold, the expected future spot rate is equal to
A) the current spot rate
B) the expected forward rate
C) the future spot rate
D) the current forward rate
Ans: D) the current forward rate
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Why did banks increase their holdings of excess reserves during the Financial Crisis of 2007-2009?
What will be an ideal response?
According to the graph shown, if this were depicting an autarky, the amount being bought domestically is:
This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
A. 60 at $10 each.
B. 60 at $17 each.
C. 115 at $14 each.
D. 150 at $10 each.
As the price of a good rises:
A. firms generally decrease the supply of the good. B. government regulation becomes more justified. C. firms generally increase the supply of the good. D. more firms can cover their opportunity cost of producing the good.
Suppose the demand for X is given by Qxd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. If advertising on good X increases by $10,000, then the demand for X will
A. decrease by $20,000. B. decrease by $100,000. C. increase by $20,000. D. increase by $100,000.