A nation's country-risk premium increases if:
a. Expected inflation becomes harder to predict.
b. The average maturity structure in the nation rises.
c. None of the above
d. Central bank policies become more predictable.
e. All of the above.
.A
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Zero lower bound refers to the fact that
A) the government budget deficit must be zero in the long run. B) the lowest possible level of the current account deficit is zero in the long run. C) the inflation rate can never decline below zero. D) nominal interest rates cannot fall below zero.
A unit of account is
A) a bank account. B) a savings account. C) a common measurement in which values are expressed. D) the same as a medium of exchange. E) none of the above
Which of the following is NOT true about this national income equation:
A) For the current account, CA, to improve, we may have to invest less than otherwise would be the case. B) For the current account, CA, to improve, we may have to save less to maintain the same amount of investment that includes foreign saving. C) For the current account, CA, to improve, the government may have to run budget surplus. D) A reduction in the trade deficit with one country will simply show up as an increase in a trade deficit with another country.
You just bought a $1,000 bond that is scheduled to mature in ten years. If interest rates rise during the next six months, the market value (or price) of your bond will
a. increase. b. decrease. c. remain unchanged. d. increase or decrease, depending on the marginal tax bracket you are in.