Suppose the current exchange rate between the U.S. dollar and the Mexican peso is $0.10 = 1 peso. Furthermore, suppose the price level in the United States rises 15 percent at a time when the Mexican price level is stable. According to the purchasing power parity theory, what will be the new equilibrium exchange rate?
A) $0.085 = 1 peso
B) $0.13 = 1 peso
C) $0.15 = 1 peso
D) $0.115 = 1 peso
E) none of the above
D
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The international capital market is
A) the place where you can rent earth moving equipment anywhere in the world. B) a set of arrangements by which individuals and firms exchange money now for promises to pay in the future. C) the arrangement where banks build up their capital by borrowing from the Central Bank. D) the place where emerging economies accept capital invested by banks. E) exclusively concerned with the debt crisis that ended in the 1990s.
The ________ is the number of unemployed divided by the labor force and the ________ is the labor force divided by the adult population
A) unemployment rate; employment rate B) unemployment rate; employment ratio C) unemployment ratio; participation rate D) discouraged worker ratio; employment rate
Refer to the payoff matrix below. If each cell has a probability of occurrence of 0.25, what are Cruise R Us' expected profits?
Cruise R Us and Cruise the World compete in the cruise line industry. Each firm needs to determine if they are going to offer special cruise packages with special rates or not offer the specials. The above payoff matrix shows the firms' net economic profit for each set of strategies.
A) $5 B) $8 C) $3 D) $9
Which of the following is a true statement about signaling games?
a. In a separating equilibrium, the second mover's posterior beliefs are the same as his priors. b. In a separating equilibrium, Bayes' rule cannot be used to compute posterior beliefs (because it produces an undefined answer). c. In a pooling equilibrium, both the first and second movers choose the same action. d. In a pooling equilibrium, the second mover learns nothing from the first mover's action.