Refer to the scenario above. Which of the following problems is likely to occur in this market?
A) The fallacy of composition
B) Moral hazard
C) Adverse selection
D) The free-rider problem
C
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Given the U.S. price level P, the foreign country price level P*, and the real exchange rate RER in foreign currency per U.S. dollar, the nominal exchange rate E would be given by
A) E = RER × (P/P*). B) E = RER × (P*/P). C) E = (P/P*) / RER. D) E = P × (RER/P*).
Other things the same an increase in the interest rate
a. increases national saving, this is shown by moving along the demand for loanable funds curve. b. increases national saving, this is shown by moving along the supply of loanable funds curve. c. decreases national saving, this is shown by moving along the demand for loanable funds curve. d. decreases national saving, this is shown by moving along the supply of loanable funds curve.