Using the UIP equation, equilibrium in the short run occurs when
a) arbitrage is possible
b) the spot rate is such that foreign and domestic investment returns are equalized
c) the spot rate and forward rate are equalized
d) foreign interest rates and domestic interest rates are equalized
Ans: b) the spot rate is such that foreign and domestic investment returns are equalized
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The formula for the CPI is
A) (Cost of CPI market basket at base period prices ÷ Cost of CPI market basket at current period prices) × 100. B) (Cost of CPI market basket at current period prices ÷ Cost of CPI market basket at base period prices) × 100. C) (Cost of CPI market basket this year × Cost of CPI market basket at base period prices) × 100. D) (Cost of CPI market basket this year × Cost of CPI market basket at base period prices) ÷ 100. E) (Cost of CPI market basket at current period prices ÷ Cost of CPI market basket at next year's prices) × 100.
A nation has a comparative advantage in a good when it has a
A) higher opportunity cost of producing the good. B) tariff in place protecting the producers of the good. C) higher absolute cost of producing the good. D) lower absolute cost of producing the good. E) lower opportunity cost of producing the good.
Refer to the information provided in Table 20.4 below to answer the question(s) that follow. Table 20.4GermanyChileBeerWineBeerWine(cases)(cases)(cases)(cases)75030 060152412453018 24304512 361560 6 48075 0 60 Refer to Table 20.4. Before specialization, Germany produces 45 cases of beer and 30 cases of wine, and Chile produces 18 cases of beer and 24 cases of wine. After specialization, the increase in wine production is
A. 2 cases of wine. B. 4 cases of wine. C. 6 cases of wine. D. 10 cases of wine.
Assume the market was in equilibrium in the graph shown. If the market price were set to $6, which of the following is true?
A. For those still interacting in the market, some surplus is transferred from seller to buyer. B. Producers gain the surplus of those buyers who dropped out of the market. C. For those still interacting in the market, some surplus is transferred from buyer to seller. D. Consumers gain the surplus of those sellers who dropped out of the market.