If I will receive a payment of $121 two years from now and the annual interest rate is 10 percent, the present value of the payment is:
A. $110.
B. $146.41.
C. $90.
D. $100.
Answer: D
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The case of New Zealand, described in the text, is concerned with the country's
A) prospects for long term growth. B) ability to sustain current account deficits. C) unproductive industrial sector and its prospects for long run growth. D) labor productivity. E) exchange rate volatility relative to other currencies.
The BRICs share all of the following EXCEPT
A) they are getting a rising share of international trade and foreign investment. B) they are easy places to do business. C) their governments have a lot of power and authority in economic affairs. D) to varying degrees they all present a new model, sometimes referred to as state capitalism.
What will happen if a country uses money creation to finance a large and expanding national debt?
a. Real output and employment will grow rapidly. b. Nominal interest rates will fall. c. The foreign exchange value of the currency will increase. d. The rate of inflation will rise.
If the U.S. were to revert to a gold standard, trade deficits would:
A. result in gold reserves in the U.S. decreasing. B. result in high inflation. C. quickly disappear. D. result in lower domestic interest rates.