The principle involved in short-run uncovered interest parity is that home interest rates will be equal to:
A) the world equilibrium real rate of interest.
B) the foreign interest rate minus foreign inflation.
C) the foreign rate of interest plus the expected rate of depreciation of the home currency.
D) the domestic nominal rate of interest plus domestic inflation.
Ans: C) the foreign rate of interest plus the expected rate of depreciation of the home currency.
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A decrease in the demand for chocolate with no change in supply will create a ________ of chocolate at today's price, but gradually the price will ________
A. surplus; fall B. shortage; fall C. surplus; rise D. shortage; rise
A carbon tax which is designed to reduce pollution is an example of a
A) noneffective incentive. B) command-and-control policy. C) market-based policy. D) government administrative rule.
Over time, poverty in the United States, as measured by the number of poor, has increased the most
a. among women because of discrimination b. among women because of an increasing divorce rate c. among households headed by women d. among the elderly because of cutbacks in the Social Security program e. for men because there are more of them
Which of the following statements is true?
a. Cost-push inflation is caused by an increase in resource costs. b. If nominal interest rates remain the same and the inflation rate falls, real interest rates increase. c. All of the answers are correct. d. Demand-pull inflation is caused by excess total spending. e. If real interest rates are negative, lenders incur losses.