Author Question: Interest rate differences between countries depend on A) differences in expected inflation, but ... (Read 53 times)

clippers! · **on:** Jun 30, 2018

Interest rate differences between countries depend on

A) differences in expected inflation, but not on expected changes in the real exchange rate.
B) differences in expected changes in the real exchange rate, but not on expected inflation.
C) neither differences in expected inflation, nor on expected changes in the real exchange rate.
D) differences in expected inflation and nothing else.
E) differences in expected inflation, and on expected changes in the real exchange rate.

Question 2

Refer to above figure. With a specific tariff of 3 per unit, what is the quantity of Widgets consumed domestically?

What will be an ideal response?