According to purchasing-power parity, if the price of a basket of goods in the U.S. rose from $1,500 to $2,000 and the price of the same basket of goods rose from 600 units of some other country's currency to 1,000 units of that country's currency, then the
a. nominal exchange rate would appreciate.
b. nominal exchange rate would depreciate.
c. real exchange rate would appreciate.
d. real exchange rate would depreciate.
a
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A firm sets its output where
A) marginal profit minus marginal cost equals zero (MP - MC = 0). B) marginal revenue minus marginal profit equals zero (MR - MP = 0). C) marginal revenue minus marginal cost equals zero (MR - MC = 0). D) marginal revenue minus marginal cost is greater than zero (MR - MC > 0)
Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. The market equilibrium quantity is
a. 400 b. 450 c. 500 d. 550
A reliable system of property rights and enforceable contracts are prerequisites for creating incentives that support a healthy market economy
a. True b. False
If either the production or consumption of a good generates an external cost, then the market equilibrium quantity will be:
A. greater than the socially optimal quantity. B. socially optimal. C. equal to zero. D. less than the socially optimal quantity.