If the GDP deflator in the United States is 114, and the GDP deflator in Ukraine is 142, which of the following changes would the theory of purchasing power parity predict? (The Ukrainian currency is the hryvnia.)
A) The demand for the dollar will fall since the dollar is overvalued.
B) The demand for the dollar will rise since the dollar is undervalued.
C) The supply of the dollar will fall since the dollar is undervalued.
D) No prediction regarding changes in the demand or supply of the dollar can be made without information on the exchange rate between the United States and Ukraine.
D
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When the U.S. dollar depreciates against other currencies:
a. foreign goods become less expensive to U.S. buyers. b. U.S. goods become more expensive to foreign buyers. c. foreign currencies depreciate against the U.S. dollar. d. the volume of U.S. imports decline. e. the volume of U.S. exports decline.
Government failure occurs when
a. intervention by the government in the market fails to provide the socially optimal quantity of goods produced b. the government fails to intervene in a market that has sizable externalities c. the government fails to protect the free market and is forced to nationalize d. the government must intervene in a market to provide the socially optimal quantity of goods e. the government imposes a tax when it should have used an obligatory control
Suppose the interest rate is 8 percent. Consider three payment options: 1 . $200 today. 2 . $220 one year from today. 3 . $240 two years from today. Which of the following is correct?
a. Option 1 has the highest present value and Option 2 has the lowest. b. Option 2 has the highest present value and Option 3 has the lowest. c. Option 3 has the highest present value and Option 1 has the lowest. d. None of the above is correct.
Related to the Economics in Practice on p. 667: When a country imposes a quota, imports to that country generally ________ and the price of the affected product in that country generally ________.
A. increase; rises B. decrease; falls C. increase; falls D. decrease; rises