If You Are Indifferent Between Investing $1000 for One Year

question 23

Multiple Choice

If you are indifferent between investing $1000 for one year in a U.S. Treasury security that has an interest rate of 5% or in a Canadian government security that has an interest rate of 8%, you must be expecting

• A)the inflation rate in the United States will be higher than the inflation rate in Canada during the year.
• B)the U.S. dollar to depreciate against the Canadian dollar by 3% during the year.
• C)the U.S. dollar to appreciate against the Canadian dollar by 3% during the year.
• D)productivity growth in Canada to be greater than productivity growth in the United States during the year.

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Definitions:

Information Dependence

Refers to the extent to which individuals or organizations rely on others for obtaining information necessary for their decision-making processes.

Internalization

The process of accepting a set of norms or beliefs as integral to one's own belief system or behavior.

Identification

The process of associating oneself with certain groups, ideals, or characteristics, often as part of developing one's identity.

Effect Dependence

A condition or situation where the outcomes or consequences depend significantly on specific actions, variables, or factors.