Which of the following explains why purchasing power parity may not hold perfectly in the long run?
A) Most countries have free markets with limited government regulation.
B) Consumer preferences for goods and services across countries are very similar.
C) Most countries do not impost trade barriers.
D) Some goods and services produced in any country are not traded internationally.
D
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Under a price cap regulation, the regulated industry has an incentive to
A) operate efficiently and not inflate its costs. B) inflate costs. C) decrease its output. D) None of the above answers is correct.
Under the Gold standard, a country is said to be in balance of payments equilibrium when the current account balance is
A) financed entirely by international lending without reserve movements. B) financed by international lending and with reserve movements. C) equal to zero. D) financed entirely by international lending and past gold reserves. E) financed entirely by gold reserves.
The origin of the idea of a trade-off between inflation and unemployment was a 1958 article by
A) A.W. Phillips. B) Edmund Phelps. C) Milton Friedman. D) Robert Gordon.
Ian McDonald owns a company that sells sleds in a perfectly competitive market. A lighter-than-normal snowfall has caused the market demand curve for sleds to shift to the left. In the short run, which of the following is likely to happen?
a. The market price for sleds will remain unchanged. b. The market price for sleds will increase. c. More sled producers will enter the industry. d. Increased economic profit will be earned by the firms in the sled industry. e. The market price for sleds will fall.