When arbitrage occurs across countries with flexible exchange rates and when the bonds in each country are identical and there are no barriers to capital flows:
A. the inflation rates in each country will be identical.
B. the interest rates on the bonds will be identical.
C. the prices of the bonds will be identical.
D. none of the answers provided is correct.
Answer: D
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An increase in demand and an increase in supply will lead to
A) unambiguous increases in both price and quantity. B) unambiguous decreases in both price and quantity. C) an unambiguous increase in quantity, but the effect on price is indeterminate. D) an unambiguous increase in price, but the effect on quantity is indeterminate.
The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in
a. microeconomics b. macroeconomics c. positive economics d. normative economics e. disequilibrium economics
A monopolist will operate at the quantity where: a. MR = MC and charge a price equal to marginal revenue
b. MR = MC and charge a price equal to average variable cost. c. MR = MC and charge a price corresponding to demand at that level. d. MR = MC and charge a price corresponding to average total cost at that level.
Historically, the typical price-earnings ratio for stocks is about
a. 3 b. 8 c. 15 d. 26