Which of the following most accurately states the economic significance of exchange?
What will be an ideal response?
Exchange creates value by moving goods from parties who value them less to parties who value them more.
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In measuring GDP, which of the following is included?
A) the value of durable consumption goods but not the value of nondurable consumption goods. B) the value of preparing meals at home C) the value of stocks and bonds bought and sold D) the value of increases in business inventories E) the value of used goods when they are sold
A sign that Country A is under pressure to devalue its currency is its:
a. Overall balance is in surplus. b. Financialaccount is in deficit. c. Overall balance is in deficit. d. Reserves account is in deficit (i.e., negative). e. All of the above.
An outcome that can result from either a price ceiling or a price floor is
a. a surplus in the market. b. a shortage in the market. c. a nonbinding price control. d. long lines of frustrated buyers.
If purchasing-power parity holds but then U.S. prices rise, which of the following move the exchange rate back towards purchasing-power parity?
a. foreign prices rise or the U.S. nominal exchange rate rises b. foreign prices rise or the U.S. nominal exchange rate falls c. foreign prices fall or the U.S. nominal exchange rate rises d. foreign prices fall or the U.S. nominal exchange rate falls