The above table presents data from the nation of Pacifica. When real GDP equals $2.0 trillion, aggregate planned expenditure equals
A) $3.75 trillion. B) $5.00 trillion. C) $5.50 trillion. D) $4.00 trillion. E) $6.00 trillion.
B
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If the dollar interest rate is 10 percent, the euro interest rate is 6 percent, then
A) an investor should invest only in dollars if the expected dollar depreciation against the euro is 4 percent. B) an investor should invest only in euros if the expected dollar depreciation against the euro is 4 percent. C) an investor should be indifferent between dollars and euros if the expected dollar depreciation against the euro is 4 percent. D) an investor should invest only in dollars. E) an investor should invest only in euros.
The relationship that says that the forward premium or discount is equal to the interest differential is
A) interest rate parity. B) purchasing power parity. C) the Fisher equation. D) the term structure of interest rates.