The theory that nominal exchange rates are determined so that the law of one price holds is called:
A. the fixed-exchange-rate rule.
B. purchasing power parity.
C. the law of supply and demand.
D. the equilibrium principle.
Answer: B
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When demand is perfectly elastic, marginal revenue is
A) zero. B) equal to price. C) declining. D) increasing.
Refer to the information provided in Figure 19.1 below to answer the question(s) that follow. 
Figure 19.1 Refer to Figure 19.1. After firms can respond to the payroll tax, employment will have
A. decreased by 100. B. decreased by 200. C. increased by 50. D. increased by 150.
To compare the real price of gas in 1975 to the real price in 2011, we need to know
A) Just the two nominal prices in both years. B) The two prices in both years and the inflation rate in 2011. C) The two prices in both years and the CPI in both years. D) The two prices in both years and the two interest rates in both years.
In which situation would policymakers be unable to neutralize the effect on the economy?
A. Imports exceed exports B. An increase in the price of oil C. Consumer confidence declines D. The federal government runs a deficit