The production possibilities frontier:
A. can show us which possible combinations of goods society should choose, but cannot tell us which points will be inefficient.
B. can show all possible combinations of goods but not tell us which combination society should choose.
C. cannot show all possible combinations of goods because society is typically inefficient.
D. can show the best combination of goods which society should choose.
Answer: B
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Assume that the U.S. interest rate is 5%, the European interest rate is 2%, and the future expected exchange rate in one year is $1.224. If the spot rate is $1.24, then the expected dollar return on euro deposits is:
a. 4% b. 7.1% c. 0.71% d. 0.129%
If the exchange rate between the dollar and Japanese yen is below the equilibrium exchange rate, there will be a ________ of dollars, and the exchange rate will ________
A) surplus; fall to the equilibrium level B) shortage; change only when the supply curve shifts leftward C) shortage; rise to the equilibrium level D) surplus; rise to the equilibrium level