If the dollar/pound exchange rate is $2/£, a Big Mac costs $5 in New York City and costs £2 in London, the pound is ________, and U.S. tourists will be ________
A) overvalued; better off in London
B) overvalued; better off in New York
C) undervalued; better off in London
D) undervalued; better off in New York
C
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Expansionary monetary policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be ________ and real GDP to be ________
A) higher; higher B) higher; lower C) lower; lower D) lower; higher
A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock. B. long-run demand shock. C. long-run supply shock. D. short-run demand shock.
A situation where illegal trading at market prices takes place is known in economics as a
A. smuggler's market. B. pirate market. C. command market. D. black market.
Refer to the graph shown depicting a monopolistically competitive firm. The marginal cost curve is represented by curve:
A. A. B. B. C. C. D. D.