Suppose the GDP deflator in the United States is 125 and the GDP deflator in Japan is 100. Also assume the United States has trade barriers on Japanese goods in the form of quotas
What does this imply about the exchange rate of yen per dollar under the theory of purchasing power parity in the long run?
A) The exchange rate of yen per dollar will be equal to 1.25.
B) The exchange rate of yen per dollar will be greater than 0.8.
C) The exchange rate of yen per dollar will be less than 0.8.
D) The exchange rate of yen per dollar will be equal to 0.8.
C
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Stagflation is defined as:
a. the simultaneous occurrence of high inflation and high unemployment. b. high inflation accompanied by falling interest rates. c. declining GDP accompanied by a stable price level. d. a persistent decline in the price level that is unresponsive to monetary and fiscal policies.
More bidders increase the selling price at an oral auction because
a. bidders bid more aggressively b. the true value of the winner is higher c. the true values of the losers is higher d. bidders shade their bids by less
An example of moral hazard is
a. A taxi driver paid per mile taking the shortest route b. a piece-rate garment worker shirking less than a per jour worker c. an hourly salesman working harder than a commission salesman d. an author on contract going to as many book signings as one with a percentage royalty rate
Which of the following is an example of a bank's assets?
A) reserves borrowed from the Fed B) checkable deposit C) vault cash D) savings deposits