Derive the interest parity condition and interpret it
What will be an ideal response?
see textbook.
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The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. What is the most Bob would pay for insurance that would replace his $100 should it be stolen?
A) $30 B) $50 C) $70 D) $75
Suppose we observe the following two simultaneous events in the market for beef. First, there is a decrease in the demand for beef due to changes in consumer tastes
And second, there is a reduction in supply due to cattle farmers selling their land to real estate developers. We know with certainty that these two simultaneous events will cause which of the following? A) no change in the equilibrium quantity and a reduction in the equilibrium price B) an increase in the equilibrium quantity and in the equilibrium price C) a decrease in the equilibrium quantity and an indeterminate change in the equilibrium price D) a decrease in the equilibrium quantity and an increase in the equilibrium price
The German inflation rate after World War I was measured in the thousands of percents. This condition is referred to as
a. fundamental inflation. b. environmental inflation. c. hyperinflation. d. episodic inflation.
Suppose we find that the price elasticity of demand for a product is 3.5 when its price is increased by 2 percent. We can conclude that quantity demanded:
A. increased by 7 percent. B. decreased by 7 percent. C. decreased by 9 percent. D. decreased by 1.75 percent.