1. When is a carry trade profitable?

a) As long as the interest rate differential is greater than the appreciation of the investment currency against the funding currency

b) As long as the interest rate differential is smaller than the appreciation of the funding currency against the investment currency

c) As long as the interest rate differential is greater than the appreciation of the funding currency against the investment currency

d) A currency carry trade is never profitable

2. The rate of inflation increases when

a) the unemployment rate equals the NAIRU.

b) the unemployment rate exceeds the NAIRU.

c) the unemployment rate is less than the NAIRU.

d) the unemployment rate increases faster than the NAIRU increases.