As long as trade across borders is unrestricted and exchange rates adjust freely, the purchasing power parity theory predicts that the exchange rate between two national currencies will adjust in the
a. short run because of the actions of arbitrageurs
b. long run to reflect differences in the nations' price levels
c. long run to reflect changes in the governments' trade policies
d. short run because of the actions of speculators
e. long run to reflect differences in military power
B
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When gross domestic product (GDP) is adjusted by adding any income earned abroad by U.S. firms or residents which is sent back to the United States and by subtracting any income earned in the United States by non-U.S
corporations or foreign nationals which is sent back to their home countries, it is called A) depreciation. B) international GDP. C) subsidized income. D) gross national product (GNP).
The primary effect of an inheritance tax is _____
a. to encourage the liquidation of assets b. provide significant government revenue c. encourage capital formation d. the encouragement of pre-death asset transfers
When positive externalities exist, the private market equilibrium represents a
A. market price which is too low and a market quantity which is too high. B. market price which is too high and a market quantity which is too high. C. market price which is too high and a market quantity which is too low. D. market price which is too low and a market quantity which is too low.
A monopoly which arises from significant economies of scale is referred to as a
A. natural monopoly. B. patent monopoly. C. strategic resource monopoly. D. monopolistic competitor.