The nominal interest rate in the U.S. is 5% and the nominal interest rate in Canada is 3%. The spot value of the U.S. dollar is 1 ($/Canadian dollar) and the forward rate is 1.2 ($/Canadian dollar). Which of the following is NOT true?
A) The dollar is likely to appreciate in spot markets.
B) The interest parity condition does not hold.
C) The dollar is trading at a forward discount.
D) Money will flow into the Canada.
A
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To reduce labor costs, companies often invent machines and methods to produce products and reduce the amount of labor required. This is called
A) anti-union. B) downsizing. C) failed labor utilization. D) induced innovation.
Suppose there is a 3 percent increase in the nominal wages of workers in an economy. The annual rate of inflation in the economy is about 6 percent. Which of the following is true in this case? a. Real wages would fall by about 3 percent
b. Real wages would increase by about 20 percent. c. Real wages would fall by about 25 percent. d. Real wages would increase by about 50 percent. e. Real wages would increase by about 10 percent.