Suppose that the U.S. interest rate is 5 percent and the Japanese interest rate is 1 percent. The effect of this difference in the foreign exchange market is that
A) financial capital stops moving.
B) a Japanese investor is guaranteed to make an additional 4 percent in yen terms by investing in the United States.
C) investors expect the yen to appreciate against the dollar.
D) investors expect the yen to depreciate against the dollar.
C
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Real business cycle theory focuses on factors affecting
A. aggregate demand. B. the velocity of money. C. aggregate supply. D. consumer spending.
If the GDP deflator in the United States is 114, and the GDP deflator in Ukraine is 142, which of the following exchange rates would the theory of purchasing power parity predict in the long run? (The Ukrainian currency is the hryvnia.)
A) 0.80 hryvnias per dollar B) 1.25 hryvnias per dollar C) 2.80 hryvnias per dollar D) 28 hryvnias per dollar
The desire of a consumer to purchase one more unit of a product is known as ______.
a. marginal production cost b. marginal willingness to pay c. deadweight loss d. producer surplus
One way to reduce exports is to
A. restrict imports. B. trade with poor countries. C. base trade on opportunity costs. D. base trade on comparative advantage.