Foreign exchange arbitrage refers to:
a. the simultaneous purchase and sale of a foreign currency asset in different markets to take advantage of a price differential.
b. actions taken to lower currency trading risks and make the markets safer.
c. the forgiving of penalties and other punishments for illegal foreign exchange activities.
d. government purchases or sales of a nation's own currency in international markets to change or stabilize the value of the currency.
Ans: a. the simultaneous purchase and sale of a foreign currency asset in different markets to take advantage of a price differential.
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In the permanent-income hypothesis incorporating rational expectations, the short-run MPC is high when changes in current income
A) are small. B) are considered a good predictor of future income changes. C) are considered a poor predictor of future income changes. D) occur when the economy is nearing cyclical peaks or troughs.
The Malthusian model performs poorly in explaining economic growth after the
A) French Revolution. B) American Revolution. C) Industrial Revolution. D) Bio-technology Revolution.
Over the period 1960-1990,
a. South Korea had a higher growth rate than the United States because it had a higher ratio of investment to GDP. b. the United States had a higher growth rate than South Korea because it had a higher ratio of investment to GDP. c. South Korea had a higher growth rate than the United States even though it had a similar ratio of investment to GDP. d. the United States had a higher growth rate than South Korea even though it had a similar ratio of investment to real GDP.
Give an example of income elasticity of demand for a normal good and an inferior good. Calculate a sample income elasticity of demand for each.
What will be an ideal response?