Suppose an MP3 player sells for $75 in the United States and 50 pounds in Britain. Which exchange rate is consistent with purchasing power parity?
a) 1.50 pounds for $1.
b) 1 pound for $1.50.
c) 3 pounds for $1.
d) 1 pound for $1.
Ans: b) 1 pound for $1.50.
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Because of a regulatory environment that encourages foreign participation and competition in financial services, the domestic markets in the __________ are not really distinct from the foreign markets
A) the United Kingdom B) the United States C) Japan D) Germany
A recession occurs only if there are two consecutive quarters of declining real GDP
a. True b. False
Which of the following situations would cause the statistical discrepancy to be $20 billion?
a. a current account balance of $380 billion and a financial account balance of $360 billion b. a current account balance of negative $400 billion and a financial account balance of $380 billion c. a current account balance of $100 billion and a financial account balance of negative $80 billion d. a current account balance of negative $50 billion and a financial account balance of $70 billion
Why are time deposits and savings accounts referred to as near money assets?
a. They cannot be used to pay for something directly but can be quickly converted to money. b. They have not been officially declared to be money by the government but can still be used to pay for things. c. They contain the money that banks must hold in reserve. d. They earn interest, and thus are nearly always increasing in value.