Nontradables are cited as a reason why purchasing power parity doesn't hold because:
A. there is no economic opportunity to profit if the goods cannot be sold in another market for another price.
B. location-specific goods are impossible to calculate a price elsewhere for.
C. goods that you can't transport cannot be sold for a profit elsewhere, even if the price differs in different locations.
D. All of these statements are true.
Answer: D
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Hired housekeepers, nannies, and cooks, working in households as either employees or self-employed persons, earn incomes for productive services that are not counted in GDP
Indicate whether the statement is true or false
Suppose the reserve ratio is 25% and banks do not hold excess reserves. When the Fed sells $40 million of bonds to the public,
A) bank reserves increase by $40 million and money supply could increase by a maximum of $40 million. B) bank reserves increase by $40 million and money supply could increase by a maximum of $160 million. C) bank reserves decrease by $40 million and money supply could decrease by a maximum of $40 million. D) bank reserves decrease by $40 million and money supply could decrease by a maximum of $160 million.
Changes in the relative prices of two goods indicate
A. Nominal price changes adjusted for the inflation in the price of the goods. B. Changes in the desired mix of output. C. That average prices for the period must not be stable. D. Inflation.
You have noticed that there is an increase in the number of homeless people in your city. At the same time you observe that there are also a number of vacant apartments. You believe that the government could reduce the number of homeless people if landlords were required to rent their apartments for less than they are currently charging. This policy recommendation would be motivated by concerns over
A. equity. B. stability. C. efficiency. D. economic growth.