The theory of purchasing power parity cannot fully explain exchange rate movements in the short run because
A) all goods are identical even if produced in different countries.
B) monetary policy differs across countries.
C) some goods are not traded between countries.
D) fiscal policy differs across countries.
C
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Suppose potential GDP is $100 billion and the natural unemployment rate is 5 percent. If the unemployment rate is 6 percent, then according to Okun's Law real GDP is
A) $102 billion. B) $98 billion. C) $101 billion. D) $99 billion. E) $100 billion.
Haiti was once heavily forested. Today, 80 percent of Haiti's forests have been cut down, primarily to be burned to create charcoal. The reduction in the number of trees has led to devastating floods when it rains heavily. This is an example of
A) the tragedy of the commons. B) tragic externalities. C) human greed. D) the consequences of too many people having private property rights.
Game theory would classify a cartel under the topic of
A) zero-sum games. B) cooperative games. C) noncooperative games. D) dominant-strategy games.
If the demand for a good increased, what would be the effect on the equilibrium price and quantity?
a. Price would increase, and quantity would decrease. b. Price would decrease, and quantity would decrease. c. Price would increase, and quantity would increase. d. Price would decrease, and quantity would increase.