According to the text, which of the following factors may make the theory of purchasing power parity unrealistic?
A) Trading countries may stop exchanging goods once prices between them equalize.
B) Shipping, insurance, and transaction costs may reduce the implication of purchasing power parity.
C) Prices may not equalize if goods arbitrage is reduced by trade barriers.
D) The effects of purchasing power parity may not show up until many years have passed.
A
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How does a cap-and-trade system:
a. force polluters to internalize an externality? b. lower transactions costs? c. give incentive to polluters to find new ways to reduce pollution? d. make future pollution reductions easy to implement?
In the market for a normal good, what is the ultimate market reaction of suppliers to an increase in the incomes of consumers?
A) Suppliers do not react, because a change in income shifts the demand curve, not the supply curve. B) The supply curve shifts to the right. C) The supply curve shifts to the left. D) Quantity supplied increases as the equilibrium moves along the supply curve due to a rise in the demand.
Assume you have $1,000 in a savings account at the beginning of the year and the price level is equal to 100. If the price level is equal to 92 at the end of the year, the real value of your savings is closest to
A. $1,092. B. $920. C. $1,087. D. $908.
The "macroeconomics" rebuttal to the traditional analysis of the minimum wage argues that
A. people work harder when they feel they are inadequately compensated, therefore an increase in the minimum wage may actually lower productivity. B. in the short-run, the demand elasticity of labor is such that businesses will actually increase the number of workers hired when the minimum wage increases. C. the rich consume more than the poor out of extra income, therefore an increase in the minimum wage increases aggregate demand. D. the rich consume less than the poor out of extra income, therefore an increase in the minimum wage increases aggregate demand.