What counts as GDP: A prosperous Chinese student pays $20K this semester for her UM courses as college tuition. She also buys a brand- new car for $10K, and devotes $5K to buy Amazon Shares. Hence, What counts as GDP is: (a)$5K, (b) $20K, (c) $25 (d) $30K, (e) $35K.
Assume that the interest rate is 8% in the US, and the interest rate is 5% in Europe. Then, in the long run (according to the interest parity):
(a) The dollar should appreciate (with respect to the euro) by 3%
(b) The dollar should appreciate (with respect to the euro) by 2%.
(c) The dollar should depreciate (with respect to the euro) by 3%
(d) The dollar should depreciate (with respect to the euro) by 2%.
