If the domestic interest rate decreases, with the foreign interest rate and the expected future spot rate remaining unchanged, the value of the domestic currency vis-à-vis the foreign currency is expected to
A. increase.
B. converge to its purchasing power parity (PPP) value.
C. decrease.
D. remain unchanged.
Answer: C
You might also like to view...
When the price of NBA tickets is $25 each, 30,000 tickets are sold. After the price rises to $30 each, 20,000 tickets are sold. At the original price, the demand for NBA ticket is:
A. elastic. B. perfectly elastic. C. inelastic. D. unit elastic.
Which of the following make(s) insurance premiums higher than otherwise?
a. adverse selection and moral hazard b. adverse selection, but not moral hazard c. moral hazard, but not adverse selection d. neither adverse selection nor moral hazard
Suppose an industry initially had been perfectly competitive and then became a monopoly. Which of the following would occur?
a. Consumer surplus would decrease. b. Consumer surplus would increase. c. Producer surplus would decrease. d. The deadweight loss would be eliminated.
Shay is risk averse and has a reservation wage of $50. She is offered two different labor contracts. One is a fixed wage of $100 per day, and the other is a piece-rate contract. In the latter, the pay rate is $1 per piece. In a good day she sells 160 units, and in bad day she sells 40 units. The likelihood of a good or a bad day is 50%
A) Shay accepts the fixed wage contract. B) Shay declines both contracts. C) Shay accepts the piece-rate contract. D) Shay is indifferent between both contracts.