The near-money components of M2 are:
A. equally liquid as the M1 components of M2.
B. more liquid than the M1 components of M2.
C. less liquid than the M1 components of M2.
D. highly illiquid.
C. less liquid than the M1 components of M2.
You might also like to view...
It is important to compare debt levels of low- and middle-income countries to exports because countries must earn foreign exchange in order to service their debts
Indicate whether the statement is true or false
A perfectly competitive firm will minimize its losses by shutting down when:
A) P < AVC at the profit-maximizing level of output. B) P < ATC at the profit-maximizing level of output. C) P < MC at the profit-maximizing level of output. D) P < TFC at the profit-maximizing level of output.
18% nominal rate expected inflation rate at 12% what is real interest rate?
What will be an ideal response?
Suppose a Dell computer that sells for $2,000 in the U.S. is exported to Canada, where it sells for 2,500 Canadian dollars. Further assume that 1.5 Canadian dollars trade for one U.S. dollar in the foreign exchange market. According to the purchasing power parity theory, which of the following will occur?
a. Computers could be purchased in Canada for 2,500 Canadian dollars, and sold in the U.S. for $2,000 . The $2,000 in revenue from each computer sold could then be exchanged for 3,000 Canadian dollars, yielding a profit of 500 Canadian dollars for each computer sold (minus any transaction costs). b. Computers could be purchased in the U.S. for $2,000 and sold in Canada for 2,500 Canadian dollars. The 2,500 Canadian dollars in revenue from each computer sold could then be exchanged for $3,000, yielding a profit of $500 for each computer sold (minus any transaction costs). c. Purchasing power parity is achieved, and there is no profit to be had from reselling the computers. d. The demand for computers would rise in both the countries and purchasing power parity would be achieved.