In the short run, there are large and persistent deviations between actual exchange rates and exchange rate predicted using purchasing power parity because of:
a. Discretionary monetary policy.
b. Discretionary fiscal policy.
c. Different market baskets in the two nations.
d. Widely different inflation rates in the two nations.
e. All of the above.
.C
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If an activity is worth pursuing at all, then the only information the decision maker needs to make a choice is
a. total benefits. b. marginal benefits and marginal costs. c. variable costs. d. fixed costs.
Economists typically agree that the special protection given to owners of patents tends to
A) reduce economic growth. B) reduce productivity. C) reduce expenditures on research and development. D) increase expenditures on research and development.
The principal-agent problem is a problem
A) of the power system of boss and subordinate where the boss (principal) exerts influence over his subordinates (agents) using punishment or threat. B) that exists when a person (principal) has more information about the task than the agent he hires to perform the task. C) caused by agents pursuing their own interests rather than the interests of the principals who hired them. D) caused by a person (principal) who hires an agent to act on his behalf but is unwilling to delegate authority to the agent to carry out the task in the best possible way.
Throughout this discussion of taxes, there has been repeated mention of the need for progressivity in the tax system. Why is this an important goal for tax systems in most societies?
What will be an ideal response?