Economists consider cyclical unemployment to be the byproduct of a healthy economy.

Economists consider cyclical unemployment to be the byproduct of a healthy economy.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 2

Suppose a Canadian investor buys a one-year U.S. government bond that pays 7 percent interest. If the U.S. dollar appreciates 4 percent against the Canadian dollar during the year, what must be the yield on a comparable Canadian government bond for interest rate parity to hold?
 a. 3 percent
  b. 4 percent
  c. 7 percent
  d. 10 percent
  e. 11 percent

Question 3

If the exchange rate between yen and dollars were 120 yen per dollar, when an American purchases a good valued at 600 yen, its cost in dollars would be:
 a. 5.
 b. 600.
 c. 72,000.
  d. 120.

Question 4

Roughly 60 percent of women participate in the labor force today.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 5

If a dollar invested in the United States yields the same return as a dollar's worth of yen invested in Japan, then it implies that:
 a. purchasing power parity exists.
  b. the exchange market is in equilibrium.
  c. the dollar/yen exchange rate is fixed.
  d. interest rate parity exists.
  e. both the currencies are pegged to a fixed amount of gold.

Question 6

Suppose that the dollar value rises from 100 to 125 yen. As a result,
 a. exports to Japan will likely increase.
 b. Japanese tourists will more likely visit the United States.
 c. U.S. businesses will be less likely to use Japanese shipping lines to transport their products.
  d. U.S. consumers will more likely buy Japanese-made automobiles.

Question 7

The average duration of unemployment tends to be longer, the higher the unemployment rate.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 8

Interest rate parity can be summarized by which of the following equilibrium conditions?
 a. The foreign interest rate must equal the domestic interest rate plus the expected inflation.
  b. The foreign interest rate must equal the domestic interest rate.
  c. The foreign interest rate must equal the expected change in the exchange rate.
  d. The domestic interest rate must equal the foreign interest rate plus the expected change in exchange rate.
  e. The domestic interest rate must equal the foreign interest rate minus any expected inflation.

Question 9

If Americans decide to buy more South African diamonds, what is the effect in the exchange market?
 a. It will increase the supply of U.S. dollars.
 b. It will decrease the supply of U.S. dollars.
  c. It will increase the demand for U.S. dollars.
  d. It will decrease the demand for U.S. dollars.

Question 10

Some people working in the underground economy could be counted in labor statistics as unemployed, while others may be counted as not in the labor force.
 a. True
  b. False
  Indicate whether the statement is true or false