Which of the following is a surplus item in the U.S. current account?
A) The U.S. government reduces the tariff rates on some imported goods.
B) IBM pays dividends to British shareholders.
C) Finn vodka becomes more popular in the United States.
D) The U.S. government cuts back on military personnel stationed in S. Korea.
D
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Suppose the Fed wants to increase the money supply. The most frequent way used to do this is
a. increase the discount rate b. decrease the prime rate c. buy US corporate stock from banks d. buy US govt bonds from banks
Suppose in Zurich £/$ = 0.5, while in New York SF/$ = 2.5, but in London £/SF = 0.1
(a) Is there any arbitrage profit that could be made with a triangular arbitrage action? Describe an example of how such a profit may be earned. (b) What would you guess about the relationship between the dollar rates and cross-rates after arbitrageurs notice this profit opportunity?