What is the link between purchasing power parity, inflation and the exchange rate?
What will be an ideal response?
Purchasing power parity implies when prices change in one country but not in another, the exchange rate should change as well. Specifically, if prices double in one country and not in another, the currency of the country experiencing the inflation will see its currency depreciate to the point where a unit of its currency will purchase half as many units of foreign currency as it did before.
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Explain the following statement: "People hate taxes primarily because of income effects while economists hate taxes primarily because of substitution effects."
What will be an ideal response?
In the short run, ________ increases the quantity of labor demanded by the firm
A) a decrease in the price of the firm's output B) an increase in the prices of other factors of production used by the firm C) a technological advance that decreases the marginal product of labor D) a decrease in the wage rate
Sweet Husks is a perfectly competitive corn farm. If the expected price of an ear of corn changes from $0.30 to $0.33, Sweet Husks' expected marginal benefit from holding additional ears of corn in inventory will shift ________ and the profit-maximizing number of ears of corn to hold in inventory will ________.
A) upward; increase B) downward; decrease C) downward; increase D) upward; decrease
All of the following are true about a monopolist except:
A. Average and marginal revenues are not the same. B. Marginal revenue is greater than price. C. Marginal revenue can be negative. D. Marginal revenue decreases with increases in output.