Explain why exchange rate model based on PPP is a long run theory
What will be an ideal response?
PPP theory is a monetary approach to the exchange rate. It is a long-run theory because it does not allow for price rigidities. It assumes that prices can adjust right away to maintain full employment as well as PPP.
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The value of any business is largely determined by the size of the dividend it pays its shareholders
Indicate whether the statement is true or false
When businesses are cutting back production, then it probably true that
a. total spending is greater than total output. b. total output is greater than total income. c. total spending is less than total output. d. inventory levels are decreasing.
In 2018, Pete Rich purchases a 1642 painting by Rembrandt for $20 million. He also pays a one percent commission to the auction house that sold the painting. What is the contribution of these transactions to GDP in the year 2018?
A. $0 B. $2 million C. $200,000 D. $20.2 million
Why does an external cost lead to inefficient overproduction?
What will be an ideal response?