Author Question: What are three things to measure for in evaluating the performance of the capital markets? A) ... (Read 51 times)

james0929

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What are three things to measure for in evaluating the performance of the capital markets?
 
  A) level of intertemporal trade, international trade, portfolio diversification
  B) level of portfolio diversification, balanced capital accounts, global inflation
  C) level of portfolio diversification, intertemporal trade, efficiency of foreign exchange
  D) onshore-offshore interest rate parity, level of portfolio diversification, stability of eurocurrency market
  E) onshore-offshore interest rate parity, interest parity and foreign exchange, balanced capital accounts

Question 2

What is the theory of Second Best?
 
  What will be an ideal response?



cswans24

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Answer to Question 1

C

Answer to Question 2

The principal of the second best tells us that when an economy suffers from multiple distortions, the removal of only a few may make matters worse, not better.



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