Suppose interest rates in the U.S. are 3% while interest rates on comparable bonds in Japan are 1%. By how much is the exchange rate between the yen and dollar expected to change according to the interest-rate parity condition?
What will be an ideal response?
The expected change in the value of the dollar is 1%-3% = -2%, implying an expected 2% depreciation in the value of the dollar.
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If the economy has an MPC of 0.8, by how much will a $50 billion increase in government purchases increase GDP? By how much will a $50 billion increase in taxes decrease GDP?
What will be an ideal response?
In the short run under perfect competition, an individual firm should increase output as long as
a. marginal revenue exceeds marginal cost b. total revenue exceeds total cost c. price exceeds marginal revenue d. total revenue is rising e. marginal revenue is rising
When Coca-Cola put real cocaine in their soda in the early 1900's, then what else did they create?
A. A new equilibrium point on the Production Possibiliites Curve. B. A more inelastic demand curve. C. A more elastic demand curve. D. A new equilibrium point on the total revenue curve.
Economic growth can be defined as a percentage increase in
A. real GDP. B. per capita real GDP. C. nominal GDP. D. consumption by households.