If a currency is at a forward premium by as much as its interest rate is lower than the interest rate in the other country, covered interest parity holds.
Answer the following statement true (T) or false (F)
True
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The 1991 Maastricht Treaty can be best described as
A) a peace treaty between Europe and the United States. B) an agreement for the accession of the Netherlands into the EU. C) an agreement for the creation of a free trade area. D) a provision for the introduction of a single European currency and European central bank. E) the beginning of a floating exchange rate European monetary system.
The above figure shows the payoff to two gasoline stations, A and B, deciding to operate in an isolated town. If firm A chooses its strategy first, then
A) firm A will not enter. B) firm B's entry is blockaded. C) both firms will enter. D) firm A will enter and firm B will not.
What is true of depletable resources is that
A. increasing scarcity leads to their total disappearance. B. they are depleted by gradually using up the supply of homogeneous resources, every unit of which is equally available. C. generally the most accessible and cheapest sources are used up so that new supplies become more costly. D. their prices must rise at the average rate of inflation.
Transaction costs can be defined as the costs:
A. incurred by buyer and seller in agreeing to and executing a sale of goods or services. B. the government must pay to allow for an exchange. C. incurred by the buyer and seller in agreeing to and executing a purchase of goods or services, excluding transportation costs. D. the government incur to create a structured market for the exchange of buyers and sellers.