Interest rate parity occurs when
A) interest rates are equal across nations.
B) interest rate differentials are always maintained across nations.
C) interest rates no longer affect the exchange rate.
D) prices are equal across nations when exchange rates are taken into account.
E) the interest rate in one currency equals the interest rate in another currency when exchange rate changes are taken into account.
The figure above shows the demand curve for dollars in the foreign exchange market.
E
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By the legal definition of unemployment, a person who has quit his job to take care of his children full time is
A) unemployed. B) not in the labor force. C) employed. D) in the labor force.
Could an increase in the demand for compact cars give an American automobile producer a comparative advantage in their production?
A) No, because comparative advantage depends entirely on productive capabilities. B) No, because changes in demand can only affect the price of compact cars. C) Yes, but only if it leads to a change in the techniques of production. D) Yes, by making compact-car production more profitable.