Nontradables are cited as a reason why purchasing power parity doesn't hold because:
A. goods that you can't transport cannot be sold for a profit elsewhere, even if the price differs in different locations.
B. there is no economic opportunity to profit if the goods cannot be sold in another market for another price.
C. location-specific goods are impossible to calculate a price elsewhere for.
D. All of these statements are true.
D. All of these statements are true.
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In the two-period model with asymmetric information, a one-unit increase in the real rate of interest on bank deposits
A) causes the real loan interest rate to increase by more than one unit. B) causes the real loan interest rate to increase by less than one unit. C) cause the real loan interest rate to decrease by less than one unit. D) causes the real loan interest rate to decrease by more than one unit.
An increase in the price level:
A. decreases the purchasing power of money, leading to higher interest rates, which decreases investment. B. increases the purchasing power of money, leading to lower interest rates, which increases investment. C. decreases the purchasing power of money, leading to lower interest rates, which increases investment. D. increases the purchasing power of money, leading to higher interest rates, which decreases investment.
In a thin market:
A. only high-quality goods are sold. B. some high-quality goods are sold, but fewer than would be sold in a market with perfect information. C. some low-quality goods are sold, but fewer than would be sold in a market with perfect information. D. no high-quality goods are sold.
Which of the following statements is correct?
A. GATT provides short-term loans of foreign currencies to nations faced with temporary balance of payments difficulties B. The "most-favored-nation" clause in reciprocal trade agreements means that any tariff reduction granted one specific nation will automatically apply to most other nations C. During the Great Depression the flow of trade was stimulated by mutual reductions in tariffs and import quotas among leading trade nations D. The Smoot-Hawley Tariff Act exempted American exporters from the Sherman Antitrust Act