Suppose purchasing power parity exists in the car stereo market in the United States and Australia. If a car stereo costs $230 in the United States and the exchange rate is $1 = $AUD1.67, the same car stereo may be purchased in Australia for approximately:
a. $AUD 138.
b. $AUD 230.
c. $AUD 2,300.
d. $AUD 384.
e. $AUD 108.
d
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According to Adam Smith, a well-governed society's wealth is positively related to
A) the division of demand. B) the division of labor. C) the degree to which society can eliminate scarcity. D) the degree to which society can encourage and promote greed.
Explain why an increase in the tax rate can result in lower tax revenues
What will be an ideal response?
According to the Ricardian model, the source of comparative advantage is:
a. differences in labor productivity in different countries. b. differences in foreign trade policies followed by the government of various countries. c. differences in resource endowments of an economy. d. differences in the fields of research and development in a country. e. differences in the taste and preferences of the consumers in different countries.
According to the equation of exchange, if real output and the money supply stay the same and the price level increases:
A. nominal GDP remains constant. B. the velocity of money has to increase. C. the velocity of money has to decrease. D. the real GDP had to rise.