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Suppose the interest rate on one-year U.S. T-bills is 4% and interest rate on one-year British T-bills is 6.5%. If the dollar is at a one-year forward premium against the British pound of 3%, the covered interest differential is:
a. the same as the uncovered interest differential.
b. equally favoring investments in both the nations.
c. in favor of investments in the United Kingdom.
d. in favor of investments in the United States.
Assume that the aggregate production function for an economy is described by: where 0
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Trace out exactly where this 100 increase in income goes in the second round and compare to our simpler treatment with a closed economy and lump sum taxes.
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The idea that immigration lowers the wages and employment of native-born workers is based on:
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