Suppose that the U.S. interest rate is 5 percent and the Turkish interest rate is 50 percent. The effect of this difference in the foreign exchange market is that
A) financial capital stops moving.
B) an American investor is guaranteed to make an additional 45 percent in dollar terms by investing in Turkey.
C) investors expect the Turkish currency to rise in value (appreciate) against the dollar.
D) investors expect the Turkish currency to fall in value (depreciate) against the dollar.
D
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Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are
a. $100, and her economic profits are $25. b. $100, and her economic profits are $75. c. $25, and her economic profits are $100. d. $75, and her economic profits are $125.
If firms have to account for external costs in production, then they will produce an output level that is ________ the efficient level.
A. below B. at C. above D. either above or below