Suppose the average interest rate on euro bonds is 4%, and the average interest rate on U.S. dollar bonds is 6%. Which should the investor choose?
a. neither-bonds have high default rates.
b. both-an investor will choose some euro bonds and some U.S. bonds to diversify.
c. the euro bond because their economies are usually more stable.
d. It is not possible to answer without information on exchange rates.
Ans: d. It is not possible to answer without information on exchange rates.
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Suppose China Airlines wants to purchase a French Airbus. The price of the Airbus is 95 million Euro. If the exchange rate is 1 euro per 10 yuan, the price of this airplane to China Airlines is
A) 950 million yuan. B) 10.52 million yuan. C) 10 million yuan. D) 9.5 million yuan.
The World Trade Organization provides for all of the following EXCEPT
A) the usage of the most favored nation clause. B) assistance in the settlement of trade disagreements. C) bilateral tariff reductions. D) multilateral tariff reductions. E) the prevention of nontariff interventions in trade.
Solow's theory of economic growth concludes, "the possibility of steady growth would be a miraculous stroke of luck" because
A) the three "determinants," s, (Y/K) and n are caused by different unrelated behavior. B) s reflects temporal consumption preferences. C) d reflects unrelated depreciation. D) n reflects birth control decisions.
Beginning at the vertical axis intercept, as a consumer moves down the budget line, she will find that
a. the marginal utility per dollar spent on the vertical axis good decreases b. the marginal utility per dollar spent on the vertical axis good increases c. the marginal utility per dollar spent on the horizontal axis good increases d. the marginal utilities per dollar spent on both goods increase e. the marginal utilities per dollar spent on both goods remain constant along that particular budget line