Imperfect asset substitutability assumes
A) the returns on foreign and domestic currency bonds are identical.
B) the returns on foreign and domestic currency are unrelated.
C) the risks of holding foreign and domestic currency are identical.
D) the risks of holding foreign and domestic currency are unrelated to returns.
E) the returns on foreign and domestic currency differ and are influenced by risk.
E
You might also like to view...
Suppose the demand curve for a good is highly elastic and the supply curve is highly inelastic. If the government taxes this good,
a. buyers and sellers will each share 50 percent of the burden, regardless of the elasticities of the demand and supply curves. b. sellers will bear a larger share of the tax burden. c. the distribution of the burden will depend upon whether the buyers or the sellers are required to send the tax to the government. d. buyers will bear a larger share of the tax burden.
The expansionary effects of an increase in government expenditures will tend to be offset, at least partially, if
a. government borrowing drives interest rates upward. b. taxes are not also increased. c. business decision makers and consumers become more optimistic as the result of the fiscal stimulus. d. the economy is operating well below its full-employment capacity.