Assume that the current exchange rate between U.K. pound and the ...

[mp14]

Assume that the current exchange rate between U.K. pound and the U.S. dollar is 2 (E = 2.0). If interest parity holds, and the U.S. interest rate is 6 while the U.K. interest rate is 8, the expected exchange rate in one year is
 
  A) 1.98.
  B) 1.99.
  C) 2.01.
  D) 2.02.
  E) 2.04.

Question 2

Briefly explain the relationship between output per capita and happiness. Specifically, to what extent are these two variables related?
 
  What will be an ideal response?

[jlaineee]

Answer to Question 1

C

Answer to Question 2

Research by Richard Layard indicates that the proportion of very happy people is higher among the rich than among the poor. At the country level, at low levels of output per capita, increases in output per capita do seem to cause increases in happiness. However, this relation is not as strong for those countries with higher levels of output per capita.

[mp14]

Excellent

[cpetit11]

TYSM