Suppose a given basket of goods and services costs 15 dollars in the United States and 14,250 won in Korea. If the exchange rate is 900 won per dollar, purchasing power parity implies that the:
A. exchange rate has attained its long run equilibrium value.
B. won must appreciate to restore purchasing power parity.
C. dollar must depreciate to restore purchasing power parity.
D. dollar must appreciate to restore purchasing power parity.
Answer: D
You might also like to view...
The figure above shows the market supply and market demand curves for pizza. If the market is at its equilibrium, what area in the graph above represents:
a) consumer surplus? b) producer surplus?
The opportunity cost of producing a good or service is the good or service that is foregone by choosing to produce another good with the same resources in a given period of time
a. True b. False Indicate whether the statement is true or false
Which of the following statements regarding price floors is TRUE?
a. Price floors always benefit consumers and harm producers. b. Price floors make markets more efficient, but they diminish profit levels. c. Price floors result in shortages. d. Price floors are intended to help certain people, but they have side effects that may harm others in predictable ways.
A private good is a good that:
A. is nonrival. B. is not excludable. C. is provided only by private sectors. D. is consumed by a single person or household.