Which of the following is not a flow variable?
A) investment
B) saving
C) the money supply
D) output
E) all of the above
D
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Explain Ricardo's theory of comparative advantage
What will be an ideal response?
The nominal interest rate in the U.S. is 5% and the nominal interest rate in Canada is 3%. The spot value of the U.S. dollar is 1 ($/Canadian dollar) and the forward rate is 1.2 ($/Canadian dollar). Calculate the forward discount or premium for the dollar. Does the interest parity condition hold? If not explain what is likely to occur in foreign exchange markets. Assume that interest rates cannot
change. What will be an ideal response?
Open market operations by the Federal Reserve System include
A) Purchasing government securities from banks and other depository institutions. B) Selling bonds to banks to expand their lending capacity. C) Buying or selling of government bonds by the BMOC. D) None of the above.
You are in the market for a used 2013 Honda Accord. You know that half of the 2013 Accords are lemons and half are peaches. If you could be assured that the Accord you were buying was a peach, you would be willing to pay up to $10,000. On the other hand, you would only be willing to pay $2,000 for a lemon. You have no ability to discern whether any particular Accord is a lemon or a peach. Sellers of Accords, on the other hand, are likely to know whether their particular car is a lemon or a peach. Suppose sellers of lemons will sell their cars for $1,500 or more and peach sellers will be willing to sell their cars for $8,500 or more. You are willing to offer ________ for a car of unknown quality and ________ are willing to sell you their car.
A. $2,000; lemon owners only B. $5,000; lemon owners only C. $6,000; lemon owners only D. $8,500; both lemon and peach owners