Assume That an American Company Today Invests Some of Its

question 72

Multiple Choice

Assume that an American company today invests some of its spare cash in a Hungarian money market account that will earn 8 percent for a period of two months. Which of the following, if it happens during the next two months, would imply that the company will earn less than 8 percent on its investment?

• A) The Hungarian forint rises in value against the dollar.
• B) Interest rates in the United States move down.
• C) Short-term interest rates in Hungarian money markets shoot up.
• D) The dollar appreciates against the Hungarian forint.

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Definitions:

Mortgage Loan

A loan used to purchase a piece of property, where the property itself serves as collateral for the loan.

Open-Market Sales

The selling of government securities in the open market to reduce the money supply and influence interest rates.

Money Supply

The total amount of money available in an economy at a particular time, including cash, coins, and balances held in checking and savings accounts.

Aggregate Demand

The summative desire for products and services within an economy, benchmarked at a constant price level over a set time frame.