Author Question: For this question, assume the interest parity conditions holds. Also assume that the domestic ... (Read 229 times)

Sufayan.ah · **on:** Jun 30, 2018

For this question, assume the interest parity conditions holds. Also assume that the domestic interest rate is 10 and that the foreign interest rate is 7. Given this information, we would expect that

A) individuals will only hold foreign bonds.
B) individuals will only hold domestic bonds.
C) the domestic currency is expected to appreciate by 3.
D) the domestic currency is expected to depreciate by 3.

Question 2

An increase in unemployment benefits will tend to cause which of the following?

A) a downward shift in the WS curve
B) an upward shift in the PS curve
C) an upward shift in the WS curve
D) a downward shift in the PS curve
E) none of the above