Which of the following is not a function of money?
a. Insurance against unexpected inflation.
b. Legal tender.
c. Insurance against expected inflation.
d. Unvarying unit of value.
e. None of the above is a function of money.
.E
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If UIP holds, the interest rate at home is 4%, and the exchange rate is expected to depreciate by 3%, then the foreign interest rate is:
a. 1% b. 3% c. 7% d. 12%
Refer to Figure 3-6. The figure above represents the market for coffee grinders. Compare the conditions in the market when the price is $15 and when the price is $21. Which of the following describes how the market differs at these prices?
A) At each price the demand for coffee grinders exceeds the supply of coffee grinders. B) At each price there is a shortage; firms will raise the equilibrium price in order to eliminate the shortage. C) At each price there is a shortage; the shortage is greater at $15 than at $21. D) The difference between quantity supplied and quantity demanded is greater at $21 than at $15.