Suppose that on Monday, a Big Mac cost $3.00 in the United States and 310 Japanese yen in Japan. On Monday, the exchange rate was $1 = 85 yen. According to the purchasing power parity theory, the yen was __________ by approximately __________ percent
A) overvalued; 22
B) undervalued; 40
C) overvalued; 29
D) undervalued; 22
E) overvalued; 18
A
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Because prices are slow to move in the short-run, when the Federal Reserve lowers the federal funds rate
A) nominal interest rates rise. B) real interest rates fall. C) inflation falls. D) real interest rates rise.
The demand for Olin skis is likely to be
a. less elastic than the demand for skis in general b. more elastic than the demand for skis in general c. unit elastic relative to the demand for skis in general d. as elastic as the demand for skis in general e. greater than the demand for skis in general
The demand curve facing a firm acts as a constraint by
a. shifting to the left and right as suppliers vary their quantities b. showing the maximum price that could be charged to sell a specific output level c. showing the minimum quantity of output that a firm needs to produce at a specific price d. limiting sales to those who are first in line when the product is distributed e. relating the actions and decisions of buyers and sellers in the market
Under monopolistic competition, entry to the industry is
A. blocked. B. completely free of barriers. C. more difficult than under pure competition but not nearly as difficult as under pure monopoly. D. more difficult than under pure monopoly.