Suppose a Canadian investor buys a one-year U.S. government bond that pays 7 percent interest. If the U.S. dollar appreciates 4 percent against the Canadian dollar during the year, what must be the yield on a comparable Canadian government bond for interest rate parity to hold?
a. 3 percent
b. 4 percent
c. 7 percent
d. 10 percent
e. 11 percent
e
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If a company pays a dividend of $5 to be received one year from now, dividends are expected to grow at a rate of 8 percent per year for the indefinite future, and the interest rate is 14 percent,
the price of the company's stock should be ________ per share. A) $8.00 B) $83.33 C) $227.27 D) $610.00
In the Solow growth model, if the level of investment is less than depreciation at the initial capital-labor ratio , then ?k is ________ and the capital-labor ratio ________ toward the steady-state capital-labor ratio
A) greater than zero; increases B) greater than zero; decreases C) less than zero; increases D) less than zero; decreases
Economists believe that people who force themselves to always eat everything on their plate at a restaurant, regardless of how full they might feel, likely do so because:
A. they gain negative utility from insulting the chef. B. they overvalue the opportunity costs of their health and time involved with eating food they don't really want. C. they include the sunk cost of their meals in making their decision. D. they undervalue the true benefit of eating too much.
Assume a purely competitive, increasing-cost industry is in long-run equilibrium. If a decline in demand occurs, firms will:
A. leave the industry, price will decrease, and quantity produced will increase. B. enter the industry and price and quantity will both increase. C. leave the industry and price and output will both increase. D. leave the industry and price and output will both decline.