Suppose that the 12-month interest rates for the United States and the United Kingdom are 7% and 6% respectively, and E = 2.10 $/£. Given this information, what is the expected exchange rate change over the year?
A) 1%
B) 4.2%
C) 2.1%
D) 2.0%
A
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Answer the next question using the following budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt. Government SpendingTax RevenuesGDPYear 1$450$425$2,000Year 25004503,000Year 36005004,000Year 46406205,000Year 56805804,800Year 66006205,000 If year 1 is the first year of this nation's existence and year 6 is the present year, this nation's public debt is
A. $275 billion. B. $3,540 billion. C. $100 billion. D. $230 billion.
Compared to a situation in which there is no change in the value of the dollar relative to the peso, in which of the following situations would you be worse off?
A) you borrow $10,000, you earn income in pesos, the dollar appreciates against the peso, you must pay back the loan in dollars B) you borrow $10,000, you earn income in pesos, the dollar depreciates against the peso, you must pay back the loan in dollars C) you borrow 10,000 pesos, you earn income in dollars, the dollar appreciates against the peso, you must pay back the loan in pesos D) you borrow 10,000 pesos, you earn income in pesos, the dollar depreciates against the peso, you must pay back the loan in pesos
A country has pasture land where cattle are allowed to graze. However, this land is threatened by overgrazing, which can lead to erosion and a reduction in the value of the land. Which of the following solutions is socially optimal?
a. Selling the pasture land to a private buyer and letting him control the grazing time b. Providing extra security to prevent grazing c. Using a layer of artificial grass to prevent grazing d. Constructing fences and allowing grazing only in one part of the pasture land at a time
Answer the following statement true (T) or false (F)
1) Rational individuals may make different choices because their preferences and circumstances differ. 2) Choices entail marginal costs because resources are scarce. 3) The production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment. 4) The production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment.