For this question, assume that interest parity holds, the future expected exchange rate is constant, the current nominal exchange rate is 1.2, the one-year foreign interest rate is 6% and the one-year domestic interest rate is 3%. Given this information, one can conclude that
A) financial market participants expect that the exchange rate (E) will increase by 3% over the coming year.
B) financial market participants expect that the exchange rate (E) will decrease by 3% over the coming year.
C) financial market participants expect that the domestic currency to depreciate by 3% over the coming year.
D) financial market participants expect that the exchange rate (E) will increase by 20% over the coming year.
A
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Suppose quantity demanded is 2,000 when price is $10 and 3,000 when price is $5. If a monopolist who was initially charging a price of $10 discovers a way to price-discriminate, it will be able to increase revenue from $20,000 to:
A. $25,000 by charging consumers with less elastic demands only $5 and keeping the price for consumers with more elastic demands at $10. B. $35,000 by charging consumers with less elastic demands only $5 and keeping the price for consumers with more elastic demands at $10. C. $35,000 by charging consumers with more elastic demands only $5 and keeping the price for consumers with less elastic demands at $10. D. $25,000 by charging consumers with more elastic demands only $5 and keeping the price for consumers with less elastic demands at $10.
The consumption of an additional unit of a good provides additional satisfaction, which is called:
A. average utility. B. total benefit. C. marginal social benefit. D. marginal utility.
Which of the following does not represent real GDP?
A) GDP in current dollars B) GDP in terms of goods C) GDP in base year dollars D) GDP in constant dollars
The law of one price works better if
A. the governments of the trading countries implement adequate trade barriers. B. transportation costs for the product are close to zero. C. there are few buyers and sellers. D. there is incomplete information.