On behalf of your firm, you make frequent trips to Tokyo. You notice that you always have to pay more dollars to get your hair cut than you pay in the U.S. This observation is
a. consistent with purchasing-power parity if prices in Japan are rising more rapidly than prices in the United States.
b. consistent with purchasing-power parity if prices in Japan are rising less rapidly than prices in the United States.
c. inconsistent with purchasing-power parity, but might be explained by limited opportunities for arbitrage in haircuts across international borders.
d. None of the above is correct.
a
You might also like to view...
Which of the following statements about the history of inflation in the U.S. is true?
a. Inflation averaged roughly 2% from 1950-19-65, but has fallen since then. b. Inflation has averaged roughly 2% since 1950. c. Inflation averaged roughly 2% from 1950-1965, rose until the early 1980s, and has fallen slowly since. d. Inflation has gradually climbed since the 1950s.
The aggregate supply curve is
a. a curve showing the quantities of total output that business will purchase for investment at various price levels. b. a curve showing the quantities of total output that will be offered for sale at various price levels. c. a curve showing the quantities of goods and services that households will provide at various price levels. d. one point on the aggregate expenditure curve.
Refer to Figure 8.5. If three ovens are produced, average variable costs are A) $166.67. B) $83.33. C) $500. D) $1,500.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A. increases B. remains constant. C. initially increases, then decreases. D. decreases.