For this question, suppose the domestic interest rate is 4% and that the foreign interest rate is 7%. And finally, assume that the domestic currency is expected to depreciate by 3% during the coming year. Given this information, we know that
A) individuals will only hold domestic bonds.
B) individuals will only hold foreign bonds.
C) individuals will be indifferent about holding domestic or foreign bonds.
D) the interest parity condition holds.
B
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Stock and Watson found that monetary policy was responsible for about ________% of the reduction in output volatility that occurred in the mid-1980s
A) 0 to 10 B) 10 to 20 C) 20 to 30 D) 30 to 40
A decrease in the reserve ratio will
A) cause the money supply to decrease. B) cause the money supply to increase. C) not affect the money supply. D) decrease the money multiplier.
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. Which of the following would be mutually beneficial terms of trade between Karl and Adam?
a. 1 ton of apples per 2 1/2 tons of oranges b. 1 ton of apples per 1 1/2 tons of oranges c. 1 ton of apples per 1/4 ton of oranges d. 1 ton of apples per 1/5 ton of oranges
Which of the following statements best completes the sentence, "All other factors constant, as the nominal interest rate increases, the opportunity cost of money..."?
A. decreases, the velocity of money decreases, and the quantity of money people want to hold decreases. B. increases, the velocity of money increases, and the quantity of money people want to hold decreases. C. decreases, the velocity of money increases, and the quantity of money people want to hold decreases. D. increases, the velocity of money decreases, and the quantity of money people want to hold decreases.