The tendency for nominal interest rates to be high when inflation is high and low when inflation is low is known as:
A. deflating.
B. shoe leather costs.
C. the Fisher effect.
D. the consumer price index.
Answer: C
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What is the expected dollar rate of return on dollar deposits if today's exchange rate is $1.10 per euro, next year's expected exchange rate is $1.165 per euro, the dollar interest rate is 10%, and the euro interest rate is 5%?
A) 10% B) 11% C) -1% D) 0% E) 15%
When a tax is imposed, some of the lost surplus becomes tax revenues and the rest is:
A. transferred to consumers. B. transferred to producers. C. transferred to recipients of government services. D. simply lost.
The transaction demand for money varies
A) directly with the interest rate. B) directly with nominal GDP. C) inversely with nominal GDP only. D) inversely with nominal GDP and real GDP.
Professional securities analysts achieve high rate of investment success following a random walk strategy.
Answer the following statement true (T) or false (F)