The PPP theory is most useful in predicting:
A. short-run changes in the exchange rate for a country that mainly produces lightly-traded standardized goods.
B. short-run changes in the exchange rate for a country that mainly produces heavily-traded standardized goods.
C. long-run changes in the exchange rate for a country that mainly produces heavily-traded standardized goods.
D. long-run changes in the exchange rate for a country that mainly produces lightly-traded non-standardized goods.
Answer: C
You might also like to view...
Refer to Scenario 5 . Calculate the price elasticity of demand for DVD players. Is demand for players elastic, inelastic, or unitary?
What will be an ideal response?
What is the theory of comparative advantage?
What will be an ideal response?
The most important determinant of price elasticity of supply is
A) the number of close substitutes there are for the good. B) the time period firms have to adjust to the new price. C) the price of the good. D) the importance of the good in the budgets of consumers.
Double markup problems arise when
a. upstream firms have no market power b. downstream firms have no market power c. upstream and downstream products are unrelated in demand d. upstream and downstream firm's pricing decisions tend to decrease the demand for the other product