A basket of goods costs $800 in the U.S. In Belgium the basket of goods costs 640 euros and the exchange rate is .80 euros per U.S. dollar. In Japan the basket of goods costs 90,000 yen and the exchange rate is 90 yen per dollar. Which country has purchasing-power parity with the U.S.?
a. both Belgium and Japan
b. Belgium but not Japan
c. Japan but not Belgium
d. neither Belgium nor Japan
b
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What is the purpose of the following figure?
What will be an ideal response?
Technological improvements cause
A. Existing firms to produce more output. B. Some firms to exit but the remaining firms to produce more output. C. New firms to enter but existing firms to continue producing their old output levels. D. Existing firms to continue producing their old output levels but to lower the price of the products.
The most responsive to interest rate changes is the _______ demand for money.
A. transactions B. precautionary C. speculative
A government ban on a good that suffers from overconsumption may be ineffective if the:
A. likelihood of being caught breaking the ban is very low. B. punishment for breaking the ban is severe. C. likelihood of being caught breaking the ban is sufficiently high. D. public did not participate in setting the punishments.