If a Dollar Invested in the United States Yields the Same

question 28

Multiple Choice

If a dollar invested in the United States yields the same return as a dollar's worth of yen invested in Japan,then it implies that:

• A)purchasing power parity exists.
• B)the exchange market is in equilibrium.
• C)the dollar/yen exchange rate is fixed.
• D)interest rate parity exists.
• E)both the currencies are pegged to a fixed amount of gold.

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Definitions:

Market Equilibrium

The point at which the quantity demanded by consumers equals the quantity supplied by producers, resulting in no economic pressure to change the price.

Scarce Inputs

Resources or factors of production that are limited in supply, which constrains economic output and allocative efficiency.

Petroleum Production

The process of extracting crude oil from the earth and refining it into usable petroleum products.

Medical Care

The diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans through professional services.