moral hazard
What will be an ideal response?
situation where one party to a contract takes a hidden action that benefits him or her at the expense of another party
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In 2002, $1 = 1 euro, and in 2006, $1 = 0.6 euro. If the price of a Ferrari was $125,000 in 2006, then:
A) U.S. consumers partially benefited, even though the dollar depreciated. B) U.S. consumers paid the full price because of the depreciated dollar. C) U.S. consumers benefited because of the appreciation of the dollar. D) one can say that the J curve effect is not valid.
The "nominal" interest rate is the
A) rate actually quoted in financial markets. B) rate actually quoted in financial markets minus the expected inflation rate. C) rate actually quoted in financial markets plus the expected inflation rate. D) rate actually quoted in financial markets divided by the expected inflation rate.