Other things remaining the same, the higher the current exchange rate, the larger is the expected profit from buying dollars

Refer to Figure 19-8. The equilibrium exchange rate is at A, $1.25/euro. Suppose the European Central Bank pegs its currency at $1.00/euro. At the pegged exchange rate,

A) there is a surplus of euros equal to 700 million. B) there is a shortage of euros equal to 500 million. C) there is a shortage of euros equal to 200 million. D) there is a surplus of euros equal to 300 million.

When uncertainty over the timing of death is added to the LCH, this ________ the planning horizon and ________ the MPC for transitory income

A) shortens, raises B) shortens, lowers C) lengthens, raises D) lengthens, lowers