Question 15 0.1 pts Suppose firms increase investment spending to replace worn-out equipment. In the short run, aggregate demand will and output will O increase; increase O increase; decrease O decrease; decrease O decrease; increase O remain unchanged; remain unchangedQuestion 13 0.1 pts An increase in _ can he expected to shift the aggregate demand curve to the right. If} the exchange rate value of the dollar If} expected future income {3: interest rates If} the price of oil If} taxes Question 14 0.1 pts An increase in short-run aggregate supply.l immediatelyr leads to ain} 3 shift of the aggregate demand curve caused by menu costs. 3 in crease in real wealth and a shift of the aggregate demand curve. K in crease in money illusion and a movement along the aggregate demand curve. ! shift of the aggregate demand curve caused by money illusion. a x in crease in real wealth and a movement along the aggregate demand curve. QUESTION 4 (UNIT 2) (25 MARKS) a) Assume the following information: Bank Bid Price of New Ask Price of New Zealand Dollar Zealand Dollar JP Morgan Bank USDO.6533 USDO.6563 Well Fargo USDO.6503 USDO.6523 Justify whether locational arbitrage is possible. If so, explain the steps involved in locational arbitrage, and estimate the profit from this arbitrage if you had USD1,000,000 to use. Discuss market forces factors that would occur to eliminate any further possibilities of locational arbitrage. (6 marks) b) Currency Pair Quoted Price Value of Canadian Dollar (CAD) in US Dollars USDO.7381 (USD) Value of New Zealand Dollar (NZD) in US Dollars USDO.6537 (USD) Value of Canadian Dollar in New Zealand Dollars NZD1.1305 (NZD) Referring to the information given, explain the steps that would reflect triangular arbitrage. If you had USD2,500,000 to use in triangular arbitrage, compute the profit from this strategy. Justify the steps taken to prevent any further possibilities of triangular arbitrage. (7 marks) C) Given the following information, calculate the yield (percentage return) to a U.S. investor who used covered interest arbitrage. Assume the investor invests USD2,000,000 determine the profit or loss in this transaction. You are required to analyse the market forces determinants occur in order to protect from any further possibilities of covered interest arbitrage. Currency pairs and Interest Rate Quoted Price Spot Rate of Canadian Dollar (CAD) USDO.738 90-day forward rate of Canadian dollar USDO.7252 90-day Canadian interest rate 3.25% 90-day U.S. interest rate 1.75% (8 marks) d) Assume that interest rate parity exists. You expect that the one-year nominal interest rate in the U.S. is 1.995%, while the one-year nominal interest rate in Australia is 3.695%. The spot rate of the Australian dollar is USDO.6939. You will need 15 million Australian Dollars in one year. Today, you purchase a one-year forward contract in Australian Dollars. Estimate how many U.S. Dollars (USD) will you need in one year to fulfill your forward contract. (4 marks)Dep.- Mileage Indep.= Cylinders SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations 7.0000 ANOVA Significance di SS MS F F Regression 12.4926 Residual Tota 169.4286 Standard Coefficients Error CStat P-value Lower 95% Upper 959% Intercept 38.7857 Cylinders -2.7500 SE CI CI PI PI Predicted Predicted Lower Upper Lower Upper Ox Value Value 95M 95% 1.0000 1.9507 5,0000 1.1763 Is there a relationship between a car's gas MILEAGE (in miles/gallon] and its number of CYLINDERS? Use the excel output above to answer the following question. What is the 90% confidence interval for the mean gas mileage of 4 cylinder cars (without units]? O a. (23,9955, 31.5759) O b. None of the answers is correct C. (23.8550, 31.7164) O d. (22.7705, 32.8009) O c. (24.9065, 30.6649)
