If the domestic dollar return (home nominal interest rate) is 5%, and the foreign nominal interest rate is 3%, and there is no expected change in future exchange rates, then as the spot exchange rate depreciates:
a. the foreign return rises.
b. the foreign return falls.
c. the domestic return rises.
d. the domestic return falls.
Ans: b. the foreign return falls.
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Indicate whether the statement is true or false
Which of the following is likely to have the most price inelastic demand?
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Paying an above-equilibrium wage rate might reduce unit labor costs by:
A. permitting the firm to attract lower-quality labor. B. increasing the opportunity cost to workers of being fired for shirking. C. increasing voluntary worker turnover. D. increasing the supply of labor.
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