What would be the effect of an increase in the European Money Supply in the Dollar Euro Exchange Rate?
What will be an ideal response?
An increase in the European money supply lowers the dollar return on Euro deposits, i.e. the dollar appreciates against the Euro. There is no change in the US money market.
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In cases where a life insurance policy owner is not the same person as the insured, insurance companies often require that such purchases be for those with an "insurable interest"
For life insurance policies, close family members and business partners will usually be found to meet this test. In this case the purchaser is demonstrating that they would suffer an economic loss if the insured were to die. What economic argument could be made for why insurance companies would make such a restriction when it seems there might be a market for life insurance to people who wish to insure others for whom there is not such "insurable interest"?
Suppose tastes for consumption now and consumption in the future have constant elasticity of substitution. It may then be the case that a tax on interest income is efficient even if savings fall in response to the tax.
Answer the following statement true (T) or false (F)