The condition that states that the domestic interest rate equals the foreign interest rate minus the expected appreciation of the domestic currency is called
A) the purchasing power parity condition.
B) the interest parity condition.
C) money neutrality.
D) the theory of foreign capital mobility.
B
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The above figure shows a perfectly competitive firm. If the market price is $5 per unit, the firm
A) will definitely shut down to minimize its losses. B) will stay open to produce and will make zero economic profit. C) will stay open to produce and will incur an economic loss. D) will stay open to produce and will make an economic profit. E) might shut down but more information is needed about the fixed cost.
Suppose that the country of Utopia produces only steel and coffee. In 1998, Utopia produced 900 tons of steel and 500 pounds of coffee, while in 1999, it produced 1,000 tons of steel and 550 pounds of coffee. Assume that no technological changes occurred in the production of either good and the resource endowment of Utopia did not change. Which of the following is true?
a. Utopia's opportunity cost of producing additional steel is 50 pounds of coffee. b. Utopia's production must have been productively inefficient in 1998. c. Utopia's opportunity cost of producing additional steel is 1/2 pound of coffee per ton of steel. d. Utopia's opportunity cost of producing additional coffee is 100 tons of steel. e. The production point in 1998 was unattainable given then-current resources and technology.
Suppose the demand function for cable TV service is given by QCTV = 15 - 0.25 × PCTV + 0.0005 × M + 0.3 × PSTV, QCTV is the quantity of cable TV demanded (thousands of households), PCTV is the price of cable TV, M is income and PSTV is the price of satellite TV service. Suppose consumers' income is $50,000 and the price of satellite TV service is $90. How many households would demand cable TV if it were free?
A. No households B. 15,000 households C. 67,000 households D. Every household would demand cable TV if it were free.
The market in which households, firms and governments buy and sell national currencies is known as
A) the foreign exchange market. B) standard drawing rights. C) the exchange rate. D) flexible exchange rates.