If purchasing-power parity holds, a dollar will buy
a. one unit of each foreign currency.
b. foreign currency equal to the U.S. price level divided by the foreign country's price level.
c. enough foreign currency to buy as many goods as it does in the United States.
d. None of the above is implied by purchasing-power parity.
c
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Reserves are a bank ________ consisting of ________
A) asset; vault cash plus bank deposits with the Federal Reserve B) asset; checking account deposits and savings account balances C) liability; vault cash plus bank deposits with the Federal Reserve D) liability; checking account deposits and savings account balances
A linear total cost function implies that:
a. marginal costs are constant as output increases b. average total costs are continually decreasing as output increases c. a and b d. none of the above
During the second half of 2008, the Fed approximately doubled the reserves of the commercial banking system. As a result, the M1 money supply
a. fell sharply, because the banks used the excess reserves to extend additional loans. b. also approximately doubled. c. was unchanged, because bank reserves will not affect the M1 money supply. d. increased, but by a much smaller amount, because the banks used only a small portion of their excess reserves to extend additional loans.
Which of the following is a reason to study the decisions of price takers?
a. While there are not many price-taker markets, these few markets dominate the economy. b. The decision making of both price searchers and price takers is identical. c. The price-taker model enhances our knowledge of competition as a dynamic process. d. Price takers are the most common type of business in the real world.