Assuming that the interest parity condition holds, what type of information is contained in interest rate differentials between domestic and foreign bonds? Explain
What will be an ideal response?
Given that the domestic rate equals the foreign interest rate minus any expected rate of appreciation of the domestic currency, any difference in interest rates will reflect this expected depreciation/appreciation of the domestic currency.
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Suppose you conduct a study in which subjects are asked the following questions: 1. "Imagine that you have decided to go to a basketball game where the cost is $25 per ticket. As you enter the arena, you discover that you have lost your $25. Would you still pay $25 for a ticket?" 2. "Imagine that you have decided to go to a basketball game and you pay $25 for the ticket. As you are walking into the arena you realize that you have lost your ticket. Would you pay another $25 for another ticket?" You find that 90% of your subjects answered "Yes" to the second question, compared to the 50% that answered "Yes" to the first question. This is an example of:
A. the default effect. B. the endowment effect. C. narrow framing. D. dynamic inconsistency.
Suppose that you can schedule a worker up to four hours per day. The benefit function is given by B(H) = 500H - 22.5H2 and the cost function is given by C(H) = 100 + 15H2. The corresponding marginal benefit and marginal cost functions are given by MB(H) = 500 - 45H and MC(H) = 100 + 30H. What is the best choice of hours for this worker?
What will be an ideal response?
Which of the following statements most likely lies within the realm of microeconomics?
A. Unemployment rises during a recession and falls during an expansion. B. An increase in government spending will increase the aggregate demand for goods and services in the economy. C. A rapid acceleration of the supply of money may create inflation. D. An increase in labor costs will increase the additional cost of producing another bus.
Robert uses his drawing skill to create medical illustrations for a company that makes medical equipment. Robert’s drawing skill is an example of ______.
a. scarcity b. a resource c. an output d. an aggregate