Purchasing power parity may not hold in practice due to all of the following except
A) transportation costs.
B) cross-country differences in environmental regulations.
C) trade barriers like tariffs and quotas.
D) the existence of non-traded goods.
B
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Suppose the economy is self-regulating, the price level is 120, the quantity demanded of Real GDP and the quantity supplied of Real GDP in the short run both equal $5.7 trillion, and the quantity supplied of Real GDP in the long run is $5.2 trillion. Given all of this information, we can conclude that the economy ____________ in short run equilibrium, and that the price level in long run
equilibrium will be _____________ than 120. A) is not; less B) is; greater C) is; less D) is not; greater
The optimal amount of R&D spending for the firm occurs where its expected return is equal to the interest-rate cost-of-funds to finance it.
Indicate whether the statement is true or false.
Suppose your community is considering using public money to build a new sports stadium for a new team that will only come to the community if it is built for them. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say
A. it may be a short-term cost, but in the long term it will be worthwhile. B. there will be no new economic activity created. C. there will be no new economic activity created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else. D. the economic activity created in the area will make it worth the investment.
When the government eliminates artificial barriers to entry:
A. more firms will enter the market. B. prices to consumers will likely increase. C. competition in the market will decrease. D. All of these will occur.