According to the purchasing power parity theory, a rise in the United States price level of 5 percent, and a rise in the Mexican price level of 6 percent cause
A) the dollar to appreciate 1 percent relative to the peso.
B) the dollar to depreciate 1 percent relative to the peso.
C) the dollar to depreciate 5 percent relative to the peso.
D) the dollar to appreciate 5 percent relative to the peso.
A
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Suppose the government imposes a $1 tax on frisbees, and the price of a frisbee paid by demanders rises by $1
A) The price rise is consistent with a perfectly elastic supply for frisbees. B) The price rise is consistent with a perfectly elastic demand for frisbees. C) The price rise is consistent with a downward-sloping supply curve for frisbees. D) The price could never rise this much, so this situation cannot happen.
Noise traders
A) tend to lose money on stock trades, but help to stabilize the market. B) tend to make higher returns than do "buy-and-hold" investors. C) create additional risk in the market by increasing price fluctuations. D) trade only when they have inside information.
A cross-price elasticity value that is negative will always indicate goods that are substitutes.
a. true b. false
Refer to the graph above for a private closed economy. In this economy, investment is:
A. $50 billion
B. $100 billion
C. $150 billion
D. $200 billion