A current account surplus implies that
A) the country is a net lender with the rest of the world.
B) the country is running a net capital account surplus.
C) foreign investment in domestic securities is at very low levels.
D) All of the above.
A
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Commitment devices:
A. need strong commitments that are hard to get out of in order to be successful. B. are never strong commitments that are hard to get out of. C. can be successful whether they have strong or weak commitments. D. are only successful if they are weak commitments that are easy to change.
In equilibrium, the interest parity condition requires that:
a. all rates of returns will equalize. b. all spot and forward rates will equalize. c. the home interest rate minus its expected rate of currency depreciation (against the foreign country) will equal the foreign interest rate on similar assets. d. all rates of returns and forward rates will equalize.
You have a bond that pays $60 per year in coupon payments. Which of the following would result in an increase in the price of your bond?
A) Coupon payments on newly-issued bonds rise to $80 per year. B) The likelihood that the firm issuing your bond will default on debt increases. C) The price of a share of stock in the company falls. D) Coupon payments on newly-issued bonds fall to $50 per year.
Which of the following is an example of a free rider?
A. Listening to NPR without donating at their annual fundraiser. B. Sitting inside of the gate with a ticket to watch an outdoor concert. C. Walking through a public park. D. Completing work for a group project.