Assume that an American investor decides to buy one-year Swiss bonds that are denominated in Swiss francs and pay 2 percent annual interest. For this purpose, $10,000 is exchanged into Swiss francs at an exchange rate of $1 = 2Fr to buy the bonds. How many dollars will the investor have after one year if the exchange rate is $1 = 1.5Fr?

According to Okun's Law, ________ tends to decline when the growth rate of real GDP is ________

A) inflation rate; low B) inflation rate; high C) unemployment rate; high D) unemployment; low

Under a balanced budget policy, a sharp decline in GDP will cause

A. no serious budget changes. B. a tax cut or an increase in expenditures. C. a tax increase or expenditure cut. D. tax receipts to exceed government expenditures.