Purchasing power parity holds when the exchange rate is equal to the product of the foreign price level and the domestic price level
a. True
b. False
Indicate whether the statement is true or false
False
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A firm can sell as many units of its output as it wants for $10 a piece. The current market wage rate for its workers is $20 per hour. It follows that the firm will hire workers up to the point where the last worker hired produces how much per hour?
a. one unit. b. two units. c. one-half a unit. d. 200 units.
The practice of "monetizing the debt" is traditionally feared because it is thought to cause
A) unemployment. B) inflation. C) a falling price level. D) a liquidity trap.
Perfectly inelastic demand has an elasticity value of 1.
Answer the following statement true (T) or false (F)
According to the equation of exchange, nominal GDP equals
A) the amount of actual money balances divided by the income velocity of money. B) the price level divided by the income velocity of money. C) the amount of actual money balances times the income velocity of money. D) the price level times the income velocity of money.