Declines in business inventories enter national income accounts:
a. negatively in the consumption category.
b. negatively in the investment category.
c. negatively in the net export category

Using the UIP equation to determine the spot exchange rate, assume that the expected spot rate (after one year) for euros (in terms of dollars) = $1.50, the current interest rate on euro deposits is 4.5%, and the current interest rate on dollar deposits is 5.5%. Which of the following current spot rates would satisfy the equation?

a. $1.65 b. $1.50 c. $1.485 d. $1.25

A basic difference between a capital good and an intermediate good is that an intermediate good is used up or transformed in the production process while a capital good is not.

a. true b. false