Asset-price bubbles ________
A) are a relatively recent phenomenon
B) end with an increase in asset prices
C) have been a feature of market economies for centuries
D) are likely to be prevented by advances in computer technology and telecommunications
C
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Walmart has been pursuing improvements in its reputation in response to growing criticism on environmental, labor, and social issues in its foreign supplier factories. Among others, which requirement has Walmart imposed on its Chinese suppliers?
a. They must demonstrate compliance with Chinese environmental laws. b. There must be a 100% improvement in energy efficiency at China's 200 largest suppliers. c. They must increase their wages to the equivalent of the U.S. minimum wage. d. It has imposed all of these on its Chinese suppliers.
Why would lowering its own interest rates affect a nation's exchange rate?
a. International interest arbitrage (the ability to borrow in low-rate markets and deposit in higher-rate markets) would cause investors to sell domestic currency assets and purchase foreign assets based in other currencies. b. A nation's central bank controls both interest rates and exchange rates. Unfortunately, they do not have sufficient funds to take care of both at the same time. c. When interest rates fall, borrowing is cheaper, spending and GDP rise and so do exports, thus causing the exchange rate to appreciate. d. In the short run, exchange rates have to adhere to PPP; otherwise, traders will make profits by purchasing in the cheap market and selling in the more expensive market, thus aligning exchange rates at the proper level