The theory of purchasing power parity
A) extends the law of one price to a group of goods.
B) assumes that most changes in nominal exchange rates are the result of changes in real exchange rates.
C) assumes that inflation rates are roughly the same in most countries.
D) was valid only under the gold standard.
A
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Actual expenditure is to planned expenditure as ________ is to ________
A) desire; accomplishment B) aggregate demand; aggregate supply C) output; income D) observed; theoretical E) fluctuation; equilibrium
A distribution of goods is inefficient:
a. only when an economy is producing inside its production possibility frontier. b. only when an economy is producing at the wrong point on the production possibility frontier. c. either when an economy is producing inside the production possibility frontier or when an economy is producing at the wrong point on the production possibility frontier. d. when the economy is producing at the optimal point on the production possibility frontier.
The recent experience in Greece, Portugal, and Ireland make the euro
a. seem very unlikely to fail because of decreasing debt levels. b. seem very unlikely to fail because of increasing interest rates. c. seem somewhat likely to fail because of increasing debt levels. d. seem somewhat likely to fail because of increasing interest rates.
If profit per unit equals (price ? cost per unit) and costs are temporarily fixed, then the aggregate supply curve will have
A. a basic “U” shape. B. a negative slope. C. a positive slope. D. All of these responses are correct.