If the interest rate on a U.S. one-year bond is 1%, the interest rate on a Mexican one-year bond is 5%, and investors expect the dollar to appreciate by 1% versus the peso, what is the currency premium for U.S. investors to hold Mexican pesos?
A) -3%
B) 3%
C) 4%
D) 7%
B
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Refer to Figure 11.4. Which diagram illustrates the effect of a decrease in the income tax rate?
A) A B) B C) C D) D
When shortages or surpluses persist for any extended period of time, they
A) are a consequence of failure to allow prices to perform their rationing function. B) are evidence of an underlying imbalance between demand and supply. C) are evidence of goods being scarce. D) indicate that there is no price that will clear the market in the case of some goods.
Fractional reserve banking can be thought of as a bank
A) withholding a portion of its total deposits that are not loaned out. B) holding deposits equal to its net worth. C) paying a fraction of its profit to depositors. D) loaning out all of its reserves.
Total utility can be determined by: a. summing the marginal utilities of each unit of a good consumed
b. multiplying the marginal utility of the last unit consumed by the number of units consumed. c. multiplying the marginal utility of the first unit consumed by the number of units consumed. d. multiplying the price of the good times the number of units consumed.