A good time for an American to hold German stocks, ceteris paribus, is when the
A. Euro is stable compared to the U.S. dollar.
B. The return in the German stock market has no relationship to the value of the dollar compared to the euro.
C. U.S. dollar appreciates in value compared to the euro.
D. U.S. dollar depreciates in value compared to the euro.
Answer: D
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If the government runs a budget deficit to fight a war and there is no Ricardo-Barro effect, what is an impact of the deficit?
A) The quantity of investment increases. B) The real interest rate rises. C) Firms purchase more capital equipment. D) Animal spirits or irrational exuberance is created. E) The quantity of private saving decreases.
As the equilibrium price falls in a perfectly competitive market, so do firms':
A. revenue and so do their profits. B. average costs and so do their profits. C. revenue, and their profits rise. D. total costs, and their profits rise.
Savings deposits are included in
A. M1 but not M2. B. M2 but not M1. C. M1 and M2. D. None of the above is correct.
When two goods are complements, their cross-price elasticity of demand is:
A. equal to one. B. positive. C. negative. D. zero.