The parity price ratio is defined by the equation
a. prices paid by farmers prices received by farmers
b. prices received by farmersprices paid by farmers
c. loans received by farmersprices paid by farmers
d. prices received by farmerstotal farm subsidies
e. total farm loans total farm subsidies
B
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A technological improvement lowers the cost of producing corn. As a result, the price of a pound of corn ________ and the quantity of corn ________
A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) falls; does not change
If there are two goods and two countries, then one country can have
A) an absolute advantage in only one good. B) an absolute advantage in both goods. C) a higher opportunity cost of producing both goods. D) a lower opportunity cost of producing both goods.
The purchasing power parity theory
a. is more a predictor of a long-run tendency than of the day-to-day relationship between changes in the price level and the exchange rate b. predicts that exchange rates between two currencies will adjust in the long run to reflect the price level difference between two countries c. is more a predictor of a short-run phenomenon than of a long-run relationship between the price level and the exchange rate between two countries d. is helpful in explaining long-run trends, even though trade barriers and central bank intervention may hinder the usefulness of the theory e. tells us that a country's currency generally will appreciate if its inflation rate is lower than that of the rest of the world
The most efficient tax possible is a
a. marginal income tax. b. lump-sum tax. c. consumption tax. d. corporate profit tax.