If American and Japanese consumers buy the same basket of goods in each country and there is no inflation in either country,
A) the law of one price will hold.
B) deviations from PPP will occur.
C) PPP will hold.
D) Both A and C.
D
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Which of the following is a leakages from the circular flow?
a. Household saving and government spending b. Business investment and household saving c. Net taxes and household saving d. Government spending and business investment e. Net taxes and government spending
Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will
a. increase the supply of corn. b. increase the supply of soybeans. c. decrease the supply of soybeans. d. decrease the supply of corn. e. have no effect on the supplies of corn and soybeans.
Suppose a tax of $5 per unit is imposed on a good. The supply curve is a typical upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. The tax decreases consumer surplus by $10,000 and decreases producer surplus by $15,000 . The deadweight loss of the tax is $2,500 . The tax decreased the equilibrium quantity of the good from
a. 6,500 to 5,500. b. 5,500 to 4,500. c. 5,000 to 3,000. d. 6,000 to 4,000.
The fact that some resource prices are fixed by contracts helps explain why firms _____
Fill in the blank(s) with the appropriate word(s).