Under fixed exchange rate, in general which one of the following statements is the MOST accurate?
A) The following condition should hold for domestic money market equilibrium: Ms/P = L(R , Y).
B) The following condition should hold for domestic money market equilibrium: Md/P = L(R , Y).
C) The following condition should hold for domestic money market equilibrium: Ms = L(R , Y).
D) The following condition should hold for domestic money market equilibrium: P = L(R , Y).
E) The following condition should hold for domestic money market equilibrium: RMd/P = L(Y).
Question 2
Futures contracts differ from forward contracts in that
A) future contracts ensures you will receive a certain amount of foreign currency at a specified future date.
B) future contracts bind you into your end of the deal.
C) future contracts allow you to sell your contract on an organized futures exchange.
D) future contracts are a disadvantage if your views about the future spot exchange rate are to change.
E) futures contracts don't allow you to realize a profit of a loss right away.
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