Which of the following events would be consistent with purchasing-power parity?
a. The price level in the United States rises more rapidly than that in Ireland and the real exchange rate defined as Irish goods per unit of U.S. goods stays the same.
b. The money supply in the United States rises more rapidly than in Egypt and the nominal exchange rate defined as Egyptian pounds per dollar falls.
c. Earl, a worldwide traveler, looks at exchange rates and worldwide breakfast prices one morning and finds that whatever country he decides to go to he can convert $15 into enough local currency to buy the same breakfast.
d. All of the above are correct.
d
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Figure 7-3
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Government provides many goods and services to the public because they are not provided by free markets. Some economists believe bureaucrats who manage the programs have no interest in maximizing net benefits (profits) but instead maximize the size of a program constrained only by the need to have total benefits exceed total costs. Figure 7-3 shows total benefits and cost curves for a program. What point is the efficient point, and what point will the bureaucrat choose?
A. A and B, respectively B. B and D, respectively C. D and C, respectively D. D and A, respectively
Which of the following countries has consistently run trade deficits in recent years?
a. Germany b. France c. United States d. Japan
Tara buys 4 alternative rock CDs when price is $10 and only 2 when price is $14 . Using the method of average values, her price elasticity of demand for alternative rock CDs is
a. 0.00 b. 0.50 c. 2.00 d. 5.00 e. 10.0
Why is market definition important for economic decision making?
A. Government regulators are interested in knowing the effect of mergers and acquisitions on competition and prices in a particular market. B A firm will define its market in order to maximize revenue. C. A firm is interested in knowing its actual and potential competitors. D. both A and C E. both A and B