The case of New Zealand, as described in the text, draws what simple conclusion regarding the country's international debt position?
What will be an ideal response?
Fundamentally, the question is whether or not a country can sustain a current account deficit indefinitely. The conclusion is that, under certain conditions, yes it can.
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What is an advantage of using options instead of forward contracts when hedging against exchange-rate risk?
What will be an ideal response?
Which of the following is NOT true of opportunity cost?
a. Opportunity costs are subjective because they depend upon how the decision-maker values his or her options. b. Opportunity costs are only the monetary costs of lost options. c. Opportunity costs are the highest-valued alternative sacrificed in order to choose an option. d. Only the decision-maker can determine his or her opportunity costs for any particular action.