Assume that interest rate parity holds and that 90-day risk-free securities yield a nominal annual rate of 3% in the United States and a nominal annual rate of 3.5% in the United Kingdom. In the spot market, 1 pound 5 $1.29. a. What is the 90-day forward rate

$1.55

Explanation:

Interest rate parity = (1+Rh) / (1+Rf) = F1 / S0

Rh = rate on home currency here US is home 3% p.a = 3%/4 = 0.75%

Rf= rate on foreign currency here Germany 3.5% p.a = 3.5%/4 = 0.875

F1 = Forward rate , S0= Spot market rate

So, (1+0.0075) / (1+0.00875) = F1 / 1.56

1.0075/1.00875 = F1 / 1.56

0.998761 = F1 / 1.56

F1 = 0.998761 * 1.56

F1 = 1.55806716

F1 = $1.55

Thus, the 90-day forward rate is $1.55

its high unemployment figures

i just had a test with that question

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.