The opportunity cost of capital for a consumer's investment decision depends on their financial situation. Which rate should the consumer use?
A) The interest rate on investment opportunities if the consumer is a net saver.
B) The interest rate paid on debts if the consumer is a net debtor.
C) A and B are correct
D) The same interest rate that local firms use to analyze their investment opportunities.
C
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If the dollar falls by 20% against the euro and rises by 10% against the yen, which of the following values for European and Japanese trade with the United States are consistent with a 10% increase in the effective exchange rate of the United States?
a. Europe: 33%; Japan: 66% b. Europe: 66%; Japan: 33% c. Europe: 50%; Japan: 50% d. None of these values is consistent with this increase.
Everything else equal, a depreciation of the dollar against the yuan:
A) will not affect the quantity of dollars demanded. B) will lead to a decrease in the quantity of dollars demanded. C) will lead to an increase in the quantity of dollars demanded. D) can either lead to an increase or a decrease in the quantity of dollars demanded depending on the magnitude of the depreciation.