Suppose you are considering the purchase of a bond issued in another country. What calculations must you do to calculate the expected return on a foreign bond? Explain
What will be an ideal response?
You must first determine the amount of foreign currency you can obtain with one unit of domestic currency (E). You then must determine how much foreign currency you will obtain in one year after purchasing foreign bonds. And finally, you must then calculate how much domestic currency you will receive in one year when you convert the foreign currency back to domestic currency.
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If the central bank follows a monetary policy in which it maintains a fixed interest rate, then
a. the LM curve will get steeper. b. the IS curve will get steeper. c. the LM curve will become vertical. d. the LM curve will become horizontal. e. none of the above.
Six possibilities are equally likely and have payoffs of $2, $4, $6, $8, $10, and $12 . The expected value is:
a. $4 b. $5 c. $6 d. $7
Almost half of all spells of unemployment end when the unemployed person leaves the labor force
a. True b. False Indicate whether the statement is true or false
The figure above illustrates a small country's production possibilities frontier. Based on the figure, we can tell that the nation's resources are
A) not equally productive in all tasks because the production possibilities frontier is bowed out. B) unlimited because the slope is negative and the PPF is bowed out. C) equally productive in all tasks because the slope is negative. D) not equally productive in all tasks because the slope is negative. E) equally productive in all tasks because the production possibilities frontier is bowed out.