Suppose the average interest rate on euro bonds is 4%, and the average interest rate on U.S. dollar bonds is 6%. Which should the investor choose?
a. neither-bonds have high default rates.
b. both-an investor will choose some euro bonds and some U.S. bonds to diversify.
c. the euro bond because their economies are usually more stable.
d. It is not possible to answer without information on exchange rates.
Ans: d. It is not possible to answer without information on exchange rates.
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Suevania opens its doors to trade with Barvania. Barvania has a comparative advantage in the production of machinery. Hence, once trade occurs Suevania's consumers will buy ________ machinery and pay ________ before
A) more; a lower price than B) the same amount of; the same price as C) less; a higher price than D) more; a higher price than E) less; a lower price than
Refer to the above figure. Suppose that the supply curve shifts from SA to SB while the demand curve shifts from DA to DB. Which of the following is TRUE about the results of the shifts in the supply and demand curves?
A) The equilibrium price increases while the equilibrium quantity remains unchanged. B) Both the equilibrium price and equilibrium quantity increase. C) The equilibrium price remains unchanged while the equilibrium quantity increases. D) Both the equilibrium price and equilibrium quantity remain unchanged.