If interest rates rise in the United States, what effect does this have on the value of the U.S. dollar?
What will be an ideal response?
If interest rates in the United States rise above interest rates in other countries, an inflow of portfolio investment into the United States will result. Although usually considered short term, this inflow in the capital account serves to increase both the demand for dollar-denominated assets and the value of the dollar vis-à-vis other currencies. This phenomenon was clearly seen during the 1980–1985 period.
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Policy that tries to influence target variables by changing the tax rates is called
A) fiscal policy. B) tax rate policy. C) recession policy. D) monetary policy.
Randomization based on covariates is
A) not of practical importance since individuals are hardly ever assigned in this fashion. B) dependent on the covariances of the error term (serial correlation). C) a randomization in which the probability of assignment to the treatment group depends on one of more observable variables W. D) eliminates the omitted variable bias when using the difference estimator based on Yi = ?0 + ?1Xi + ui, where Y is the outcome variable and X is the treatment indicator.
Suppose there are 100 firms in a market and all are identical. Firm A will hire 20 workers when the wage rate is $10, 25 workers when the wage rate is $9, and 30 workers when the wage rate is $8
The equilibrium wage rate for a number of years has been $9. If the wage rate falls to $8, we know that A) the quantity demanded for the market will increase to 3,000 workers. B) the quantity demanded for the market will increase to more than 3,000 workers. C) the quantity demanded for the market will increase to less than 3,000 workers. D) the quantity demanded for the market will increase, but we can't tell which of the above answers is correct.
Several writers have helped to popularize the notion that stock prices follow no discernible pattern. What is meant by a random walk, and how can you explain why people continue to invest in stocks if the random walk theory is correct?
What will be an ideal response?