Over the last 5 years the amount of country A's currency it took to buy a unit of country B's currency more than doubled. A. Did country A's currency depreciate or appreciate? B. According to purchasing-power parity, what explains the change in the value of country B's currency?
A. It depreciated.
B. Money growth, and so inflation, was higher in Country A than in Country B.
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Cleantown and Grimyville are identical except for the inferior air quality in Grimyville. All potential residents have identical tastes. Apartments in Cleantown rent for $400 per month. The cost of breathing Grimyville air is $75 per month. The quantity of apartments in each town is fixed.
(i) Explain why an apartment in Grimyville must rent for $325 per month. (ii) Consider the social gain created by Grimyville apartments. How is this social gain divided between the residents and the landlords? (iii) Suppose that the air in Grimyville is brought up to Cleantown standards. Who benefits from the cleaner air?
Isoquants are convex to the origin due to:
A) the law of diminishing marginal utility. B) the assumption of the diminishing marginal productivity of each input. C) the fact that as less capital is used, its marginal productivity falls. D) the fact that as more labor is used, its marginal productivity rises.
Which of the following would be expected if the tariff on foreign-produced shoes were decreased?
a. The domestic price of shoes would fall.
b. The supply of foreign shoes to the domestic market would decline, causing shoe prices to rise.
c. The number of unemployed workers in the domestic shoe industry would decline.
d. The demand for foreign-produced shoes would decrease, causing the price of shoes to increase in other nations.
Structural unemployment is often caused by
A. the recessionary stage of the business cycle. B. changes in economic organization and production which make some jobs and job skills obsolete. C. new labor force entrants. D. striking workers. E. layoffs associated with seasonal slowdowns in construction and other industries.