Hi Tutor

The ____________________ condition tells the investor that when he/she has to decide between domestic or foreign financial investment he/she would consider the difference in the interest rate and the _________________________.

1. multilateral parity; expected changes in the exchange rate

2. interest rate relation; expected economic growth

3. multilateral interest parity; expected changes in the exchange rate

4. interest parity; expected changes in the exchange rate

5. interest parity; expected economic growth

And Then:

If investors, based on the following information,

Domestic interest rate in SA on South African bonds:12%

Domestic interest rate in the USA on USA bonds:6%

prefer to buy USA bonds it indicates that they expect the R/$ exchange rate to

1. be unchanged.

2. appreciate by less than 6%.

3. depreciate by less than 6%.

4. depreciate by more than 6%.

5. appreciate by more than 6%

And Then:

Which of the following statements are correct?

a. Foreign demand for domestic goods is also known as exports.

b. Domestic demand for foreign goods is also known as imports.

c. Part of domestic demand falls on foreign/imported goods.

d. The "domestic demand for goods" and the "demand for domestic goods" are the same in an open economy and are different in a closed economy.

1. a, b, c and d

2. Only a, b and c

3. Only b and d

4. Only c and d

5. Only b, c and d

And Lastly:

Which of the following statements are correct?

a. Equilibrium output is associated with a trade deficit only.

b. Equilibrium output is associated with a trade surplus only.

c. Equilibrium output is associated with a trade deficit or a trade surplus or trade balance.

d. The goods market is in equilibrium when domestic output is equal to the demand for domestic goods.

e. The goods market is in equilibrium when domestic output is equal to the domestic demand for goods.

1. a and d

2. b and d

3. a and e

4. b and e

5. c and d