When uncovered interest parity holds, it means that
A. the exchange rate risk is unusually high.
B. a currency is expected to appreciate by as much as its interest rate is higher than the interest rate in the other country.
C. a currency is expected to appreciate by as much as its interest rate is lower than the interest rate in the other country.
D. the forward premium equals the interest rate differential.
Answer: C
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If the government tried to implement a total ban on pollution: a. output prices would decrease
b. output prices would increase. c. production would increase. d. production would be unchanged.
Supply-side economists believe that, in general,
A. by raising tax rates we can raise tax revenue. B. by lowering tax rates we can raise tax revenue. C. tax rates have very little effect on tax revenue. D. tax rates are much too low.
Which of the following is a TRUE statement?
A. All economic goods are goods, but not all goods are economic goods. B. Economic goods and goods mean the same thing. C. Economic goods do not include services while goods do include services. D. All goods are economic goods.
If inflation is very high, say 50 or 100 percent a year, monetary policymakers wishing to lower it will shift their focus to controlling:
A. the long-term interest rate. B. the short-term interest rate. C. money growth. D. the exchange rate.