If the Current Spot Rate Is S₀^$/C$ = $0

question 21

True/False

If the current spot rate is S₀^$/C$ = $0.8839/C$ and the one-year forward rate is F₁^$/C$ = $0.8754/C$, then the U.S. dollar is selling at a forward premium.

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Definitions:

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.

Deadweight Loss

The decrease in economic productivity that happens when a good or service does not reach, or cannot reach, its equilibrium point.

Consumer Surplus

The difference between the maximum amount consumers are willing to pay for a good or service and the actual amount they do pay.

Tax Revenue

The wealth accumulated by governments through the process of taxation.