The Current Spot Rate for the Norwegian Krone Is $1

question 30

Multiple Choice

The current spot rate for the Norwegian krone is $1 = NKr6.83.The expected inflation rate in Norway is 3 percent and in the U.S.2 percent.A risk-free asset in the U.S.is yielding 4.5 percent. What real rate of return should you expect on a risk-free Norwegian security?

• A)4.5%
• B)5.0%
• C)5.5%
• D)6.0%
• E)6.5%

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Definitions:

Marginal Product

The additional output resulting from the use of one more unit of a factor of production, holding other factors constant.

Factor Demand

The demand for productive resources (like labor, land, and capital) that businesses need to produce goods and services.

Marginal Product

The extra output produced by using an additional unit of a particular production factor, while holding other factors steady.

Candy Bars

Confectionery items that consist of chocolate and other sweet ingredients, often with a filling or coating.