Assume that a Chrysler automobile sells for $15,000 in the United States and that the exchange rate is $1 = €1.3 . For purchasing power parity to hold, the same car should sell in Germany for:
a. €15,000.
b. €11,538.
c. €19,500.
d. €1,538.
e. €15,500.
c
You might also like to view...
Average propensity to consume
A) is the same as the break-even point. B) gives the amount a person changes planned consumption for a change in real disposable income. C) is the amount of consumption that is independent of the level of disposable income. D) is the proportion of total disposable income that is consumed.
The contribution to total revenues coming from the next worker hired is
A) marginal product. B) marginal revenue product. C) total product. D) total revenues.
An effective way in which patents allow manufacturers to prevent the entry of new firms into the industry is through
a. creating perfectly inelastic demand. b. threats of infringement suits. c. creating tying contracts. d. threats of triple damages.
In the rational expectation model, government control over aggregate demand: a. gives it the power to alter real output and employment even when the effects of government policies are expected. b. can affect real output in the short-run only if policies are unexpected
c. has potential to change long-run real output as long as the aggregate supply curve is vertical. d. has highly unpredictable effects on real output in the long run.