Assume that the interest parity condition holds. Also assume that the U.S. interest rate is 8% while the U.K. interest rate is 6%. Given this information, financial markets expect the pound to
A) depreciate by 14%.
B) depreciate by 2%.
C) appreciate by 2%.
D) appreciate by 6%.
E) appreciate by 14%.
C
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A basic problem with the infant-industry argument is that:
A. most industries need protection when they are mature, not when they are first established. B. the amount of the tariff is unlikely to have much impact on the success of an infant industry. C. political pressure will likely prevent the withdrawal of the tariff when the industry matures. D. domestic consumers will continue to buy the foreign products anyway, regardless of the tariff.
The main way corporations and governments raise money is through
A. the stock market. B. the bond market. C. the equity credit channel. D. loans from banks.
The real business cycle theory is based on all of the assumptions below EXCEPT
A. flexible prices. B. the absence of rationality among people. C. pure competition. D. flexible wages.
According to the marginal productivity theory of resource demand, the labor-demand schedule for a producer selling in a purely competitive market is:
A. The same as the marginal resource cost schedule B. The same as the marginal productivity schedule C. The same as the marginal revenue product schedule D. Independent of the value of the product being produced