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Which of the Following Statements Is True

question 73

Multiple Choice

Which of the following statements is true?
I. Small differences in rates of economic growth can lead to large differences in levels of potential output over time.
II. From the perspective of the rule of 72, small differences in rates of economic growth between two countries will not significantly affect their respective standards of living.
III. Countries that have higher population growth rates are likely to see higher economic growth rates because increases in population lead to increases in the size of the labor force.


Definitions:

Forward Rate

An agreed-upon price for a financial transaction that will occur at a future date, used in the trading of currencies, commodities, and financial instruments.

Risk-Free Rate

A speculative return rate on a risk-free investment, often exemplified by government bond yields.

Future Exchange Rate

The future exchange rate is the agreed-upon rate at which two currencies will be exchanged on a specified future date, used in hedging and trading strategies.

Spot Exchange Rate

The present exchange rate for immediate swap of one currency to another.

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