9. Choose the likely illustration(s) of the time inconsistency of policy among the follows. (A) A company decides to invest in new technology based on a long-term strategy to improve productivity. (B) When people expect that inflation will be low, it is harder for the Fed to increase output by increasing the money supply. (C) A government reduces taxes during a recession to stimulate the economy, following its long-term fiscal policy. (D) A central bank commits to a low inflation target but later increases the money supply to boost short-term employment before an election, leading to higher inflation.

12. Consider the concept of interest rate parity (IRP) for the association between interest rate differences and exchange rates. Which of the following statement(s) correctly illustrate the principle of interest rate parity? (A) If Country A's interest rate is 5% and Country B's interest rate is 3%, the forward exchange rate should predict a 2% depreciation of Country A's currency relative to Country B's currency. (B) If investors expect the currency of Country A to appreciate, the interest rate in Country A must be lower than in Country B to maintain interest rate parity. (C) Interest rate parity ensures that there are no arbitrage opportunities arising from differences in interest rates between two countries. (D) Interest rate parity implies that the difference in interest rates between two countries is equal to the expected change in exchange rates between their currencies.

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