Which of the following provides the best information about the direction of the government's fiscal policy?
a. changes in the Fed's holdings of U.S. government securities
b. changes in the reserve requirements of the Federal Reserve
c. changes in the nation's trade balance
d. changes in the size of the federal government's budget deficit or surplus
D
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Using the UIP equation, what would happen to the spot rate for euros if the dollar-euro exchange rate is expected to appreciate in the future?
a. The spot rate to purchase euros would rise (dollar depreciation). b. The spot rate to purchase euros would fall (dollar appreciation). c. The spot rate to purchase euros would remain unchanged. d. The spot rate to purchase euros would remain unchanged today, but rise in the future (dollar depreciation)
If a government wanted to increase the prosperity of a nation, it could best serve this goal by
a. protecting domestic industries from international trade, thus encouraging domestic growth. b. regulating the way in which firms can operate. c. reducing barriers that restrict the ability of potential competitors to enter markets. d. subsidizing firms that are in danger of going out of business.