Author Question: If people expect the future exchange rate for dollars will be lower, then in the foreign exchange ... (Read 125 times)

captainjonesify · **on:** Jun 29, 2018

If people expect the future exchange rate for dollars will be lower, then in the foreign exchange market the current

A) quantity demanded of dollars decreases.
B) demand for dollars decreases.
C) quantity demanded of dollars increases.
D) demand for dollars increases.
E) supply of dollars decreases.

Question 2

Assume an economy begins with zero inflation, a 25 percent income tax rate, and a real interest rate of 4 percent.

If inflation rises to 4 percent, the nominal interest rate becomes ________ percent and the after-tax real interest becomes ________ percent.
A) 8; 6 B) 8; 2 C) 0; 1 D) 8; 4 E) 6; 2