If interest rates fall, the opportunity cost of spending money today rather than tomorrow
A. rises.
B. falls.
C. rises only if the prices of goods today rise.
D. falls only if the prices of goods today fall.
Answer: B
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According to the theory of the invisible hand, if buyers and sellers are free to pursue their own self-interest, the result often will be:
A. an equitable allocation of resources. B. an incomplete allocation of resources. C. an efficient allocation of resources. D. the exploitation of productive resources.
The discount rate represents the interest rate on
A) overnight loans between banks. B) three-month U.S. securities. C) municipal bonds. D) one-year discount bonds. E) none of the above
If the opportunity cost of producing one basketball in Romania is 3 Barbie dolls, while the opportunity cost of producing one basketball in Nigeria is 2 Barbie dolls, _______ has the comparative advantage in the production of basketballs.
A. Romania B. Nigeria C. both Romania and Nigeria D. neither Romania nor Nigeria
Assume that a British investor buys a one-year U.S. Treasury bill that pays 6 percent annual interest. Given a yield of 4 percent on a comparable British Treasury bill, the U.S. dollar must depreciate 2 percent against the British pound during the year for interest rate parity to hold
a. True b. False Indicate whether the statement is true or false