If You Are Indifferent Between Investing $1000 for One Year

question 23

Multiple Choice

If you are indifferent between investing $1000 for one year in a U.S. Treasury security that has an interest rate of 5% or in a Canadian government security that has an interest rate of 8%, you must be expecting

• A)the inflation rate in the United States will be higher than the inflation rate in Canada during the year.
• B)the U.S. dollar to depreciate against the Canadian dollar by 3% during the year.
• C)the U.S. dollar to appreciate against the Canadian dollar by 3% during the year.
• D)productivity growth in Canada to be greater than productivity growth in the United States during the year.

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Definitions:

Inductive Generalization

A method of reasoning in which a general rule is inferred from a finite set of specific instances.

Critical Period

A specific window of time during development when the brain is particularly receptive to certain types of learning and environmental influences.

Language Development

Concerns the process by which individuals acquire their ability to perceive, comprehend, and produce language.

Early Infancy

The initial period of a child's life, often considered the first year, characterized by rapid growth and development.