If the Dollar Interest Rate Is 10 Percent and the Euro

question 36

Multiple Choice

If the dollar interest rate is 10 percent and the euro interest rate is 6 percent, then

• A) an investor should invest only in dollars if the expected dollar depreciation against the euro is 8 percent.
• B) an investor should invest only in euros if the expected dollar depreciation against the euro is 8 percent.
• C) an investor should be indifferent between dollars and euros if the expected dollar depreciation against the euro is 8 percent.
• D) an investor should invest only in dollars.
• E) an investor should invest only in euros.

---

Definitions:

Usage Tax

Usage tax is a levy on the use of goods or services, typically calculated as a percentage of the purchasing price or a flat rate, aimed at specific products or activities.

Difference-In-Differences

is an econometric technique used to estimate the effect of a specific intervention or treatment by comparing the changes in outcomes over time between a treatment group and a control group.

Usage Tax

A tax imposed on the use of goods or services, typically applied to regulate or discourage certain behaviors.

Average Number

A statistical measure representing the sum of values divided by the count of those values.