The spot exchange rate is equal to the forward exchange rate:
a. When the central bank chooses to equalize both rates.
b. When the interest rates of the two countries are not expected to change.
c. When the difference between the interest rates of the two countries are expected to remain constant.
d. When the nominal interest rates of the two countries are equal.
e. When the interest rate of at least one of the two countries equals the spot exchange rate.
.D
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Which of the following is a source of market failure?
A) an inequitable income distribution B) unforeseen circumstances which leads to the bankruptcy of many firms C) a lack of government intervention in a market D) incomplete property rights or inability to enforce property rights
To promote long-term economic growth, national governments should:
a. Increase government spending and reduce taxes. b. Reduce government spending and increase taxes. c. Establish fair rules of behavior and provide the means to enforce them. d. Promote research and development with federal funds. e. Impose tariffs and quotas until the nation is on its feet.