The predictive accuracy of relative purchasing power parity improves if:
a. Both countries have highly mobile capital markets.
b. Both countries have central bank controls in place so that exchange rates change in an orderly manner.
c. Both countries under consideration have very high inflation rates.
d. Both countries under consideration have high growth rates.
e. Both countries are either developed or undeveloped (i.e., one is not developed and the other undeveloped).
.C
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Which of the following statements is/are correct?
I. Depository institution managers undertake riskier actions than they otherwise would because of the existence of deposit insurance. II. Because of the existence of deposit insurance, depositors in savings and loans and other banks have little incentive to investigate the financial stability of these institutions. A) I only B) II only C) both I and II D) neither I nor II
If the nominal interest rate is 10 percent, the inflation rate is 6 percent, and the tax rate on interest income is 25 percent, what is the after-tax real interest rate?
A) 1.5 percent B) 4.0 percent C) 3.0 percent D) 6.0 percent E) 3.5 percent
Assume that the actual deficit is $150 billion with the economy well below potential output and that the level of economic activity rose to its potential level while tax revenues increased by $50 billion and transfer payments fell by $20 billion
Then, what is the structural deficit? a. $180 billion b. $120 billion c. $220 billion d. $80 billion e. $100 billion
Social costs of a good are equal to
A. external costs minus private costs. B. private costs plus external costs. C. external costs divided by the private costs. D. private costs minus external costs.