Which of the following statements is the MOST accurate?
A) If PPP holds true, then the law of one price holds true for every commodity as long as the reference baskets used to reckon different countries' price levels are the same.
B) If the law of one price holds true for every commodity, PPP must hold automatically.
C) If the law of one price holds true for every commodity, PPP must automatically hold as long as the reference baskets used to reckon different countries' price levels are the same.
D) If the law of one price does not hold true for every commodity, PPP cannot be true as long as the reference baskets used to reckon different countries' price levels are the same.
E) If PPP holds true, then the law of one price must hold true automatically.
C
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In the specific factor model, the effect of an increase in the productivity of labor in the production of cloth will cause a(an) ________ in the quantity of labor used to produce cloth, a(an) ________ in the quantity of labor used to produce food and
a(an) ________ in the wage rate. A) increase; decrease; increase B) decrease; increase; increase C) increase; decrease; decrease D) decrease; increase; no change E) increase; increase; no change
Monopolies that price discriminate do so because
A) they are able to do so and no one else can. B) they can increase their profits. C) it keeps them out of trouble with the government. D) it is more efficient.
Under the Bretton Woods system of fixed exchange rates,
a. devaluations were frequent and small. b. devaluations were usually unforeseen. c. the IMF ensured that exchange rates were never changed. d. speculators could profit from an attack on a weak currency.
The run up in gasoline prices between 1999 and 2007
A. still had them much below their long-term inflation-adjusted average. B. put them about the same as their long-term inflation-adjusted average. C. still had them slightly below their long-term inflation-adjusted average. D. put them much above their long-term inflation-adjusted average.