82) For a small economy under flexible exchange rates that is initially in a long-run equilibrium, a higher rate of inflation in the short run will be followed by: The central bank responding with (A) which will result in a (B)______

Answer is:

(A) contractionary monetary policy; (B) real exchange rate appreciation

(A) A decrease in the inflation rate; (B) of lower interest rates

(A) A decrease in the target inflation rate; (B) the real exchange rate appreciates

(A) An increase in the target inflation rate; (B) the real exchange rate depreciates

(A) an increase in the inflation rate; (B) of lower interest rates

Answer is:

Answer is:

all opportunities for easy arbitrage profit have been exhausted

.short-run interest rates will be lower than long-run interest rates, holding the risk quality of assets constant

the existence of speculative asset price bubbles when interest rates approach zero

the nominal rate of interest is positive

Answer is:

Market makers require a bid-ask spread to offer their services at al

That maturity premiums increase with the term of a bond

A bond price represents the present discounted value of the payments agreed upon at the time when the bond was issued.

Capital markets are not efficient for long-maturity loans.

Answer is: