A price ceiling does NOT lead to a deadweight loss if ________
A) the equilibrium market price lies below the price ceiling
B) the equilibrium market price lies above the price ceiling
C) the price elasticity of market demand is greater than 1
D) the price elasticity of market supply is greater than 1
A
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For this question, assume that interest parity holds, the future expected exchange rate is constant, the current nominal exchange rate is 1.2, the one-year foreign interest rate is 6% and the one-year domestic interest rate is 3%. Given this information, one can conclude that
A) financial market participants expect that the exchange rate (E) will increase by 3% over the coming year. B) financial market participants expect that the exchange rate (E) will decrease by 3% over the coming year. C) financial market participants expect that the domestic currency to depreciate by 3% over the coming year. D) financial market participants expect that the exchange rate (E) will increase by 20% over the coming year.
Money supply M1 does not include the currency held by:
A. Households in their wallets or purses B. Business firms C. Commercial banks D. State and local governments