The immediate (two-day) exchange of one currency for another is a
A) forward transaction.
B) spot transaction.
C) money transaction.
D) exchange transaction.
B
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The risk that interest payments will not be made, or that the face value of a bond is not repaid when a bond matures is
A) interest rate risk. B) inflation risk. C) liquidity risk. D) default risk.
Private investment fluctuates ________, which supports those economists who advocate policy ________
A) procyclically, rules B) procyclically, activism C) countercyclically, rules D) countercyclically, activism
Say 6 homogenous consumers have individual willingness to pay P = 20 - 4Q. If the marginal cost of providing Q is 6Q, the optimal amount of Q is
A. 0. B. 2. C. 6. D. 4.
One difficulty in using voluntary transactions to internalize externalities is that
A) people are motivated by self-interest and are often unwilling to engage in a transaction that might make another person better off. B) the government usually will not enforce contracts of this type. C) transaction costs of coming to an agreement can be very large when numerous people are involved. D) people usually don't understand what the real opportunity costs are that they face.