Why does anyone demand foreign currency?
a. international trade in goods and services
b. international trade in financial assets
c. purchases of physical assets overseas
d. All of the above are correct.
d
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How does a decrease in the price of one good affect a consumer's budget constraint? How is the effect different from a decrease in the consumer's income?
What will be an ideal response?
A current account deficit 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.
An increase in the liquidity of corporate bonds will ________ the price of corporate bonds and ________ the yield of Treasury bonds, everything else held constant
A) increase; increase B) reduce; reduce C) increase; reduce D) reduce; increase
If an individual's utility function is quasi-concave, his or her MRS will:
a. diminish as x is substituted for y. b. increase as x is substituted for y. c. be undefined except in special cases. d. always depend only on the ratio of x to y.