Suppose the interest rate on six-month treasury bills is 7 percent per year in the United Kingdom and 4 percent per year in the United States. Also, today's spot exchange price of the pound is $2.00 while the six-month forward exchange price of the pound is $1.98. U.S. investors expect that the future spot rate of pounds will be $2.04. By investing in U.K. treasury bills rather than U.S. treasury bills, and NOT covering exchange-rate risk, the approximate extra return that U.S. investors expect to earn for six months is
A. 5.0 percent.
B. 3.0 percent.
C. 3.5 percent.
D. 0.5 percent.
Answer: C
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When marginal cost is less than average total cost,
a. marginal cost must be falling. b. average variable cost must be falling. c. average total cost is falling. d. average total cost is rising.
If the demand for a good increased, what would be the effect on the equilibrium price and quantity?
a. Price would decrease, and quantity would increase. b. Price would decrease, and quantity would decrease. c. Price would increase, and quantity would increase. d. Price would increase, and quantity would decrease.
Which statement is true?
A. American manufacturing wages are the highest in the world. B. American manufacturing wage rates are the lowest of any industrial country. C. Our manufacturing wage rates are the second highest in the world. D. None of the statements are true.
Since 1929, the distribution of money income in the United States has
A. shifted toward the poorer 20 percent away from the richer 20 percent. B. become more equal. C. become slightly more unequal. D. not dramatically changed.