Author Question: Suppose that the 12-month interest rates for the United States and the United Kingdom are 7 and 6 ... (Read 118 times)

B · **on:** Jun 30, 2018

Suppose that the 12-month interest rates for the United States and the United Kingdom are 7 and 6 respectively, and E = 2.10 /. Given this information, what is the expected exchange rate change over the year?

A) 1
B) 4.2
C) 2.1
D) 2.0

Question 2

Explain why each of the following is not a valid argument for protection.

(a) patriotism
(b) fair play (e.g. level international playing fields)
(c) preservation of jobs

ASDFGJLO · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A

Answer to Question 2

(a) Protection can lower welfare, which would be unpatriotic.
(b) The notion of fair play does not conform well to the real world. Fair play for producers would be unfair for consumers, etc.
(c) Protection tends to redistribute jobs rather than create new ones.