In the two-country model of the Monetary Approach, the spot exchange rate is determined by
A) the relative quantities of money supplied and demanded.
B) the real money stock in country A vs. country B.
C) the nominal incomes in the two countries.
D) the ratio of prices in the economies.
A
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Given that Tamar is a risk-averse person, she might accept a bet with a 50 percent chance of losing $100 today if she had a 50 percent
a. chance of winning $120 in two years and the interest rate was 11%. b. chance of winning $114 in two years and the interest rate was 7%. c. chance of winning $110 in two years and the interest rate was 3%. d. None of the above are correct; a risk averse person would not accept any of the above bets.
If the exchange rate is .60 British pounds = $1, a bottle of ale that costs 3 pounds costs
a. $1.80. b. $4.80. c. $5. d. None of the above is correct.
Frederic Bastiat formulated
A. the theory of absolute advantage. B. the theory of comparative advantage. C. the petition of the candlemakers to shut out the sun. D. the infant industry argument.
The money demand curve will shift to the left if:
A. the price level increases. B. ATM machines are introduced. C. the nominal interest rate increases. D. the nominal interest rate decreases.