PRINCIPLES OF MICROECONOMICS (OER)
PRINCIPLES OF MICROECONOMICS (OER)
2nd Edition
ISBN: 9781947172340
Author: Timothy Taylor, Steven A. Greenlaw
Publisher: OpenStax
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Chapter 10, Problem 5RQ

What is the relationship between product differentiation and monopolistic competition?

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If interest rate parity holds between two countries, then it must be true that:   Question 3 options:   The interest rates between the two countries are equal.   The current forward rate is an unbiased predictor of the future exchange rate.   The interest rate differential between the two countries is equal to the percentage difference between the forward exchange rate and the spot exchange rate.   Significant covered interest arbitrage opportunities exist between the two currencies.   The exchange rate adjusts to keep purchasing power constant across the two currencies.
If interest rate parity holds between two countries, then it must be true that:   Question 3 options:   The interest rates between the two countries are equal.   The current forward rate is an unbiased predictor of the future exchange rate.   The interest rate differential between the two countries is equal to the percentage difference between the forward exchange rate and the spot exchange rate.   Significant covered interest arbitrage opportunities exist between the two currencies.   The exchange rate adjusts to keep purchasing power constant across the two currencies.
Suppose the indirect exchange rate for the Canadian dollar is 0.93. Based on this, you know you can buy:   Question 2 options:   $1 U.S. for $1.93 Canadian.   $1 U.S. for $1.08 Canadian.   $1 U.S. for $0.93 Canadian.   $1.93 U.S. for $1 Canadian.   $1.08 U.S. for $1 Canadian.

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