Covered interest parity refers to the situation in which:
a. interest rates are the same in both currencies.
b. spot and forward rates are the same in both currencies.
c. the forward rate between the two currencies is equal to the ratio of their returns times the spot rate between the two currencies.
d. there is an opportunity for arbitrage whenever prices are sluggish and sticky.
Answer: c. the forward rate between the two currencies is equal to the ratio of their returns times the spot rate between the two currencies.
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Answer the following questions true (T) or false (F)
1. In recent years, economists have come to rely more on the establishment survey rather than the household survey to analyze current labor market statistics. 2. The labor force participation rates of men have gradually increased since 1948. 3. Eliminating frictional unemployment would be good for the economy.
For the CPI, the market basket is expressed in terms of what the goods cost in
A. 1929. B. The base period. C. The optimal period. D. 2000.