Which of the following statements best describes the impact of a higher interest rate?
a. A higher interest rate will attract an inflow of foreign financial capital and depreciate the exchange rate in response to the increase in demand for U.S. dollars by foreign investors and a decrease in supply of U.S. dollars.
b. A higher interest rate will attract an inflow of foreign financial capital and appreciate the exchange rate in response to the increase in demand for U.S. dollars by foreign investors and an increase in supply of U.S. dollars.
c. A higher interest rate will attract an inflow of foreign financial capital and appreciate the exchange rate in response to the increase in demand for U.S. dollars by foreign investors and a decrease in supply of U.S. dollars.
d. A higher interest rate will attract an inflow of foreign financial capital and depreciate the exchange rate in response to the increase in demand for U.S. dollars by foreign investors and a increase in supply of U.S. dollars.
c. A higher interest rate will attract an inflow of foreign financial capital and appreciate the exchange rate in response to the increase in demand for U.S. dollars by foreign investors and a decrease in supply of U.S. dollars.
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Markets can fail to achieve efficiency when
a. there are prices consumers do not think are fair. b. there are wages workers do not think are fair. c. trade puts people out of work. d. there are buyers or sellers without adequate information about the quality of goods.
Suppose a firm has a Cobb-Douglas weekly production function Q = F(L, K) = 25L0.5K0.5, where L is the number of workers and K is units of capital. The wage rate is $900 per week, and a unit of capital costs $400 per week. What is the least-cost input combination for producing 675 units of output?
A. L = 18; K = 40.5 B. L = 40.5; K = 18 C. L = 27; K = 60.75 D. L = 27; K = 27