Whenever a nation's currency is expected to depreciate because of various market conditions, the following situation exists regarding its forward rate for another currency:
a. there is a forward discount from the spot rate by the rate of depreciation.
b. there is a forward premium from the spot rate by the rate of depreciation.
c. there is no difference between the spot and forward rates.
d. there is no predictable relationship between the spot and forward rates
Ans: b. there is a forward premium from the spot rate by the rate of depreciation.
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A) LIBOR. B) the Treasury note rate. C) the prime rate. D) the six-month Treasury bill rate.
If wages and prices become extremely flexible ________
A) there is no trade off between inflation and unemployment B) unemployment can hardly deviate from the natural rate C) it becomes very difficult to differentiate the short-run from the long-run Phillips curve D) all of the above E) none of the above
A payment to an owner of a resource in excess of its opportunity cost is know as
A) real wages. B) economic rent. C) financial interest. D) accounting profits.
The accumulation of investments in people, such as education and on-the-job training, is known as
a. physical capital. b. human capital. c. efficiency wage. d. compensating differentials.