According to the purchasing power parity theory, the exchange rate would eventually adjust such that they equalize the various:
A. Currencies' values in terms of goods and services
B. Inflation rates in the trading nations
C. Interest rates in the trading nations
D. Supply and demand in the foreign exchange markets
A. Currencies' values in terms of goods and services
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Social Security spending and Medicare spending are all financed with revenues held in trust funds
Indicate whether the statement is true or false
The relationship between MPC and MPS is
a. 1 + MPC = MPS b. 1 – MPC = MPS c. 1 + MPS = MPC d. MPC – MPS = 1 e. MPS – MPC = 1
Figure 2-8
Assume that U.S. agricultural land is used either to raise cotton for clothing or to grow wheat. Curve FG in represents the current production possibilities frontier for cotton and wheat. What could cause the production possibilities frontier to shift from FG to FH?
a.
a change in government subsidies that favors wheat production over cotton production
b.
development of a new fertilizer that improves production of wheat, but has no impact on cotton production
c.
development of a new fertilizer that improves production of cotton, but has no impact on wheat production
d.
newly reclaimed swampland that is equally suited to growing either crop
e.
newly reclaimed swampland that can be used to grow either crop, but is better suited to growing wheat
A disadvantage of chain-weighting is that
A) past inflation rates change whenever the base year changes. B) past growth rates of real GDP change whenever the base year changes. C) it causes output growth to slow. D) the components of real GDP don't sum to real GDP.