What is purchasing power parity and what happens when this condition doesn't hold?
What will be an ideal response?
Purchasing power parity means equal value of money. If prices of goods and services are higher in the United States than the (exchange rate adjusted) prices of goods and services in, say, Japan, purchasing power parity does not occur because a unit of currency buys less in the United States than in Japan. The demand for U.S. dollars decreases and the supply of U.S. dollars increases so that the value of the dollar falls against the yen to restore purchasing power parity.
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We expect the demand curve in the perfectly competitive industry to be
a. negatively sloped. b. vertical. c. horizontal. d. perfectly elastic.
All checking accounts are transactions accounts.
Answer the following statement true (T) or false (F)
Economic growth always takes the form of
A.) An expansion of production possibilities. B.) A change in how goods are distributed. C.) A movement along the production possibilities curve. D.) Higher prices.
Which of the following best explains the difference between commodity money and fiat money?
A. Fiat money has no value except as money, whereas commodity money has value independent of its use as money B. all money is commodity money, as it has to be exchanged for gold by the central bank C. commodity money has no value except as money, where as fiat money has value independent of its use as money