According to the theory of purchasing power parity, if the inflation rate in the United States is greater than the inflation rate in Canada, explain what should happen to the exchange rate between the U.S. dollar and the Canadian dollar
What will be an ideal response?
The value of the U.S. dollar should decline relative to the value of the Canadian dollar. It will take more U.S. dollars to buy a Canadian dollar.
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In Macroland there is $10,000,000 in currency. The public holds half of the currency and banks hold the rest as reserves. If banks' desired reserve/deposit ratio is 10%, deposits in Macroland equal ________ and the money supply equals ________.
A. $50,000,000; $55,000,000 B. $50,000,000; $60,000,000 C. $100,000,000; $100,000,000 D. $55,000,000; $55,000,000
Which of the following statements is true of the U.S. economy in 2014, as per the records of the BLS?
A) Number of unemployed workers > number of adults out of the workforce > number of employed workers B) Number of employed workers > number of adults out of the workforce > number of unemployed workers C) Number of unemployed workers > number of employed workers > number of adults out of the labor force D) Number of employed workers > number of unemployed workers > number of adults out of the labor force
Economists believe the most persuasive argument for protectionism is to protect infant industries. But the argument has a drawback. What is this drawback?
A) Governments are usually too impatient and do not allow protection to remain in place long enough to allow industries to be competitive in international markets. B) Protection lessens the need for firms to become productive enough to compete with foreign firms; this often results in infant industries never "growing up." C) Governments usually use tariffs, rather than quotas, to protect infant industries in order to collect tariff revenue. (Quotas do not result in government revenue). D) Governments always make the level of protection for infant industries too high.
As the amount of time a consumer has to adjust to a change in price increases, so does the price elasticity of demand for a good
Indicate whether the statement is true or false