If the spot price of the euro is $1.10 per euro and the 30-day forward rate is $1.00 per euro, and you believe that the spot rate in 30 days will be $1.05 per euro, then you can try to maximize speculative gains by
A. buying euros in the current spot market and selling euros in 30 days at the future spot rate.
B. signing a forward foreign exchange contract to sell dollars in 30 days.
C. signing a forward foreign exchange contract to sell euros in 30 days.
D. buying dollars in the spot market and selling the dollars in 30 days at the future spot rate.
Answer: B
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The "big tradeoff" refers to the tradeoff between
A) work and leisure. B) equity and efficiency. C) public goods and private goods. D) taxes and transfers.
Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. What is the opportunity cost of producing coffee in Chile?
a. Half a pound of sugar b. Two-fifth of a pound of sugar c. 2 pounds of sugar d. One-third of a pound of sugar e. 4 pounds of sugar
A movement along a demand curve is called a change in
a. income b. quantity demanded c. demand d. tastes e. population
A government budget deficit affects the supply of loanable funds, rather than the demand for loanable funds, because
a. in our model of the loanable funds market, we define "loanable funds" as the flow of resources available to fund private investment. b. in our model of the loanable funds market, we define "loanable funds" as the flow of resources available from private saving. c. markets for government debt are fundamentally different from markets for private debt. d. of our assumption that the economy is closed.