If the prices for the same goods and services are different in two nations, the exchange rate adjusts over the long run to achieve
A) zero net exports for each nation.
B) purchasing power parity between the two currencies.
C) balance of payments account between the two nations equal to zero.
D) a zero current account balance between the two nations.
E) interest rate parity.
B
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Professional athletes often have contract clauses prohibiting risky activities such as skiing and motorcycle riding. These clauses are
A) limited-liability clauses. B) risk insurance. C) restrictive covenants. D) illegal.
Which of the following groups would most likely benefit from a law that is extremely tough on those who drink and drive?
a. truck drivers b. taxi drivers c. bartenders d. doctors and nurses
In an economy, 35 million workers are employed, the labor force is 50 million, and total population is 70 million. The unemployment rate is:
A. 30 percent. B. 15 percent. C. 25 percent. D. 50 percent.