The problem with using foreign exchange rates to convert one country's GDP into dollars is that
A. exchange rates do not reflect differences in inflation rates.
B. not all goods and services are sold on world markets.
C. the dollar has been losing value over the last twenty years.
D. the values of currencies are not comparable.
Answer: B
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Indicate whether the statement is true or false
A prediction based on rational expectations ________
A) relies solely on past experience B) will always be superior to one based on adaptive expectations C) is based on real, rather than nominal variables D) will not always be accurate
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Suppose that the United States has an absolute advantage over Mexico in producing both agricultural and manufactured goods. In the U. S., the opportunity cost of 1 unit of agricultural output is 2 units of manufactured goods. In Mexico, the opportunity cost of 1 unit of agricultural output is 1.5 units of manufactured goods. Total production in the U. S. and Mexico will be maximized if
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