The purchasing power parity predicts that if the price level in the US falls relative to Mexico,
a. The dollar will appreciate relative to the peso
b. The dollar will depreciate relative to the peso
c. There is no effect on either currency
d. PPP predicts price level will normalize in the long-run
a
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If the bank is selling euros for $0.74, then what is the implied euro price of the dollar?
A) 1.35 € B) 1.74 € C) 2.48 € D) None of these values are correct.
The area above the supply curve and below the market price represents:
a. the consumer surplus b. the producer surplus. c. the deadweight loss of the producer. d. the deadweight loss of the consumer.
The crowding-out effect works through interest rates to:
A. decrease the effectiveness of contractionary fiscal policy. B. decrease the effectiveness of expansionary fiscal policy. C. increase the effectiveness of expansionary fiscal policy. D. increase the effectiveness of contractionary fiscal policy.
Adding globalization and large trade deficits to the standard AS/AD model creates:
A. increased domestic production and consumption. B. increased domestic production and reduced consumption. C. reduced domestic production and consumption. D. decreased domestic production and increased consumption.