The same laptop computer cost $2,000 in the United States, 220,000 Japanese yen, £1,300 British pounds, and €1900 in Germany. If the law of one price holds, what are the yen/$; £/$ and €/$ exchange rates?
What will be an ideal response?
If the law of one price holds the yen/$ exchange rate is 110 yen/$; the £/$ exchange rate is 0.65£/$ and the €/$ exchange rate is 0.95€/$.
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If actual output is greater than the full-employment level of output, we should expect wages to increase over time
a. True b. False
For this question, assume that the aggregate production function is represented by Y = AN. Which of the following represents the price setting relation for this economy?
A) (1 + m)A B) (1 + m)A/W C) (1 + m)W D) W/A E) none of the above
Emotions like guilt and sympathy:
A. reduce the likelihood that a transaction will maximize total economic surplus. B. can solve commitment problems, but generally reduce players' payoffs. C. can solve commitment problems. D. are irrelevant to economic decision-making.
Which of the following is true in a market economy?
A. Central planners determine answers to the basic economic questions. B. Resources are used efficiently. C. The distribution of wealth is equal. D. Information for production and distribution decisions pass directly to buyers from the government.