Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's interest rate rises relative to England and nothing else changes, then the:
a. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc.
b. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market falls, causing an uncertain change in the value of the Swiss franc.
c. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc.
d. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.
e. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing an appreciation of the Swiss franc.
.A
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A) the moral hazard problem. B) the adverse selection problem. C) outside collateral. D) inside collateral.
For consumers with a binding borrowing constraint, a decrease in the real interest rate ________
A) decreases consumption now, and in the future B) increases consumption now, and in the future C) decreases consumption now, and increases future consumption D) has no impact on consumption