To compare the GDP of countries with different currencies, it is necessary to convert to a “common denominator” often referred to as _______.
a. purchasing power parity (PPP)
b. exchange rate
c. GDP per capita
d. GDP
b. exchange rate
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The more elastic the demand for a good, the
A) less a sales tax lowers the price paid by buyers. B) more a sales tax lowers the price paid by buyers. C) less a sales tax raises the price paid by buyers. D) more a sales tax raises the price paid by buyers.
Four stores have a problem with theft and security is a public good. Let S stand for the number of person-hours of security patrols per week. The marginal benefit of security patrols to each of the stores is given by the formula MB = 200/(1 + S). Patrols cost $25 per hour. Which of the following gives the marginal social benefit function?
A. MSB = 50/(1 + S) B. MSB = 4 + [200/(1 + S)] C. MSB = 800/(1 + S) D. MSB = [200/(1 + S)] - 4
If the United States has a current account deficit and the capital account is zero, which of the following must be true?
A) The balance on the financial account must equal the balance on the current account. B) Domestic public saving must be less than net foreign investment. C) Net foreign investment must be negative as well. D) Domestic private saving must be less than net foreign investment.
Indicate whether each of the following is a positive or normative economic statement: I. The imposition of a price ceiling below equilibrium price will lead to a shortage of housing. II. The local government should control the rate of increase in rents so that low-income residents are not forced to move from the area