Though the theory of purchasing power parity applies in the long run, it is unlikely to apply in the short run, because ________
A) foreigners purchase only tradable goods
B) countries do not produce identical goods
C) prices are sticky
D) price levels change quickly
C
You might also like to view...
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
An increase in input productivity will ________.
A. reduce aggregate demand B. reduce the equilibrium price level, assuming downward flexible prices. C. shift the aggregate supply curve leftward D. reduce the equilibrium real output
The theory that there is no way to "get rich quick" in securities due to a lack of predictable trends is
A) no-win theory. B) market trend analysis. C) random walk theory. D) trading.
A monopolist faces a demand curve given by P = 20 - Q and has total costs given by TC = Q2. By using a bit of calculus, you should be able to determine that the firm's marginal revenue is MR = 20 - 2Q and its marginal cost is MC = 2Q. Now suppose that the country in which this monopolist is located decides to engage in international trade. The world price of the product produced by the monopolist is $12. The profit-maximizing output level is 6, and the profit-maximizing price equals $12. What are its monopoly profits at this price and quantity?
a. $25 b. $36 c. $50 d. $75