Assume you are a Chinese exporter and expect to receive $250,000 at the end of 60 days.You can remove the risk of loss due to a devaluation of the dollar by
A. keeping the dollars in the United States after they are delivered to you.
B. buying dollars now and selling these dollars at the end of 60 days.
C. selling dollars in the 60-day forward exchange market.
D. selling the yuan equivalent in the forward exchange market for 60-day delivery.
Answer: C
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To the casual observer it is often difficult to understand how a company would spend several million dollars building a plant or other structure and then simply stop and abandon the project midway. How can this be justified on economic grounds?
What will be an ideal response?
What is market supply? How is the market supply curve for a good obtained?
Two of the bizarre taxes mentioned in this chapter's Snapshot were the Flush Tax and the Window Tax. Which of the following statements is true based on the description of these taxes shown here?
A. The deadweight loss is the same for the Flush Tax and the Window Tax.
B. The deadweight loss is greater for the Window Tax.
C. The deadweight loss is greater for the Flush Tax.
D. There is no way to calculate the deadweight loss for both taxes given the information provided.
In the above figure, along which range would the demand for this good be most elastic?
A. between point c and point d B. between point d and point e C. between point a and point b D. at point e