Arbitrage with two currencies is NOT possible when:
a. there is an exchange rate difference in two markets.
b. traders are familiar with markets.
c. the exchange rates are in equilibrium, and the same is occurring in all markets.
d. the exchange rates are extremely volatile.
Ans: c. the exchange rates are in equilibrium, and the same is occurring in all markets.
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Suppose Ford develops a technology enabling its full-size cars to get 150 miles per gallon. If it applies for a patent on that technology and is denied, Ford can expect to
a. still have a monopoly on that technology because Ford has monopoly power in the industry b. sell that technology to a competitor who will reapply for the patent c. be reimbursed for its investment in research by the government because it was the government that denied the patent in the first place d. earn lower profit than they would with the patent e. sell fewer cars in the short run, but more in the long run than its competition
If you invest in a foreign company by buying 8 percent of its shares of stock, you have engaged in
A) moral hazard. B) foreign direct investment. C) portfolio investment. D) adverse selection.
U.S. taxpayers spend many hours during the year maintaining records for tax purposes and preparing their income tax returns. This administrative cost
A) is part of the deadweight loss of taxation. B) is larger for individuals in the lowest income quintile than for individuals in the highest income quintile. C) is equal to the value of consumer surplus associated with the income tax system. D) can be claimed as a deduction on income tax returns.
Which of the following is a feature of a bond market? a. Only households can borrow money through a bond market
b. Only corporations can borrow money through a bond market. c. Both households and corporations borrow money from a bond market. d. Both corporations and government borrow money from a bond market.