What actions must a central bank take if it is trying to maintain a pegged exchange rate, but there's downward pressure on the value of its currency
What will be an ideal response?
It uses previously accumulated foreign currency to buy its own currency in the foreign exchange market. If it runs out of reserves, it needs to make its currency more attractive by raising interest rates.
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Which of the following bonds will have the highest yield-to-maturity if all three bonds appear identical to investors in terms of risk, liquidity, information costs, tax treatment?
A) one with a coupon of $50 B) one with a coupon of $100 C) one with a coupon of $200 D) none of the above
When facing a 50% chance of receiving $50 and a 50% chance of receiving $100, the individual pictured in Figure 5.2
A) would pay a risk premium of 10 utils to avoid facing the two outcomes. B) would want to be paid a risk premium of 10 utils to give up the opportunity of facing the two outcomes. C) would pay a risk premium of $7.50 to avoid facing the two outcomes. D) would want to be paid a risk premium of $7.50 to avoid facing the two outcomes. E) has a risk premium of 10 utils.
The increase in a firm's total revenues resulting from hiring an additional unit of labor is known as the marginal:
a. product. b. revenue product. c. cost. d. none of these.
Fiscal policy is concerned with _____
a. government spending and taxation b. government spending and changes in money supply c. money supply and taxation d. government spending, taxation, and money supply e. only money supply