Interest rates set by the European central bank during the period 1999-2004 resulted in what situation compared to that in the United States?
a. European rates were exactly the same as those in the United States, resulting in uncovered interest parity.
b. European rates were consistently higher than U.S. rates.
c. European rates were consistently lower than U.S. rates.
d. At first the European rates were much higher, but then the ECB acted aggressively to lower them.
Ans: b. European rates were consistently higher than U.S. rates.
You might also like to view...
Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are
A) illegal. B) the result of the voting paradox. C) irrational because elected officials will almost always act in the interest of the voters who have to pay the cost of the legislation. D) examples of rent seeking.
Most favored nation (MFN) status means that a country treats another country
A) better than its other trading partners. B) the same as its other trading partners. C) worse than its other trading partners. D) any way it chooses since it is the "most favored nation." E) None of the above.
It is argued that the United States would be foolish to maintain a free-trade stance in a world in which all other countries exploit child or prisoner labor, or are protectionist
On the other hand, Ricardo's classic demonstration of the sources and effects of comparative advantage cogently demonstrates that regardless of other country policy, free trade remains the first best policy for a country to follow, since it will maximize its consumption possibilities (conditional upon other country policies). Explain. Discuss the contradiction with the argument in the preceding paragraph.
People who report being unemployed but who, in fact, are working for "under the table" pay to avoid taxes on their earnings are really employed and therefore cause the reported unemployment rate to be higher than it would otherwise be
a. True b. False Indicate whether the statement is true or false