The idea behind the “Big Mac index” is a test of
A. interest rate parity theory.
B. long-run equilibrium theory.
C. purchasing power parity theory.
D. exchange rate equalization theory.
Answer: C
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According to the life-cycle hypothesis, if the average person expects to live another 48 years, the short-run MPC out of unexpected changes in income is
A) 0.52. B) 0.48. C) 0.9792. D) 0.0208.
Which of the following is the best description of the effects of an increase in the supply of bread?
a. Consumers will pay more for bread. b. Bread prices will fall, and bread sales will rise. c. A permanent surplus of bread will remain on the market. d. Bakers will have higher marginal costs.
Which of the following generates demand for foreign currencies?
A. The building of plants by foreign corporations in the United States. B. Exports from the United States to foreign countries. C. Foreign tourists traveling to the United States. D. Imports of foreign goods by firms located in the United States.
The accompanying figure shows a a single consumer's demand for ice cream at the student union.
During the summer, there are 300 students on campus. Each student's weekly demand for ice cream is shown above. When the price of ice cream is $2.00 per scoop, those 300 students purchase a total of ________ scoops per week from the student union.
A. 3,000 B. 1,500 C. 1,800 D. 1,200