Assume the interest parity condition holds and that individuals expect the dollar to appreciate by 5% during the coming year. Given this information, we know that
A) the interest rate differential between the two countries is less than 5%.
B) i < i.
C) i = i.
D) individuals will only hold foreign bonds.
E) none of the above
C
You might also like to view...
Cross-price elasticity of demand is
A. negative for substitute goods. B. positive for general goods. C. negative for complementary goods. D. unitary for secondary goods.
Spending on goods and services by all levels of government in the U.S. combined is smaller than investment spending but larger than consumption
a. True b. False Indicate whether the statement is true or false
A firm's accounting profit is called a normal profit when its:
a. accounting profit is equal to zero. b. economic profit is equal to zero. c. opportunity cost is equal to zero. d. average cost is minimum. e. economic profit is equal to accounting profit.
One of the common ways to fund a budget deficit is to: a. borrow through the mutual funds market. b. borrow through the equity market
c. borrow through the bond market. d. borrow through credit unions.