Assume That Capital Is Not Perfectly Mobile and Substitutable and That

question 5

Multiple Choice

Assume that capital is not perfectly mobile and substitutable and that the interest rate in the United States is currently 5%, which includes a 1% risk premium associated with continued high budget deficits. Investors expect the euro to rise against the dollar by 2% and thus demand a _____ in the _____.

• A) higher return equal to 7%; United States
• B) higher return equal to 7%; European Union
• C) lower return equal to 3%; United States

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Definitions:

Self-Analysis

The process of introspectively examining one's own thoughts, feelings, and behaviors to gain insight into one's personality and actions.

Highest-Paying

Referring to jobs, positions, or industries that offer the most monetary compensation compared to others.

Job Interview

A formal meeting in which an employer assesses an applicant's qualifications for a position by asking questions and discussing their background.

Realistic Job Preview

An accurate presentation of the duties and responsibilities of a job to potential candidates, highlighting both positive and negative aspects.