It is customary to express changes in the exchange rates of two currencies over time, as:
a. the loss of purchasing power of one currency divided by the loss of purchasing power of the other currency.
b. the percentage change expressed as an appreciation or depreciation of one against the other.
c. a ratio of the absolute values (without signs).
d. a ratio of the price of gold in each nation.
Ans: b. the percentage change expressed as an appreciation or depreciation of one against the other.
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The "V" in the equation of exchange MsV = PY refers to
A) the velocity of inflation. B) a variable. C) income velocity of money. D) a vector that links P to Y.
The Big Mac index:
A. is measured by The Economist. B. is a simple measure that indicates differing costs of living in different countries. C. converts the price of a Big Mac worldwide to dollars, and compares it to how much they cost in the U.S. D. All of these statements are true.
The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is
a. an explicit cost. b. an accounting cost c. an implicit cost. d. forgone accounting profit.
The United States has a trade deficit when the value of the goods and services we import exceeds the value of the goods and services we export.
Answer the following statement true (T) or false (F)