Suppose the current exchange rate between the U.S. dollar and the Mexican peso is $0.10 = 1 peso. Furthermore, suppose the price level in Mexico rises 15 percent while the U.S. price level remains constant. According to the purchasing power parity theory, which of the following exchange rates comes closest to being the equilibrium exchange rate?
A) $0.087 = 1 peso
B) $0.085 = 1 peso
C) $0.115 = 1 peso
D) $0.13 = 1 peso
A
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The amount of funds that a nation can withdraw from the International Monetary Fund depends upon
A) the rules set up by the World Bank. B) whether it is seeking a long-term or short-term loan. C) whether it is a developing nation or a developed nation. D) its quota subscription.
Different nations answer the what, how, and for whom questions differently. China, for instance, builds dams using many workers and only a little capital equipment. The United States builds dams using a few workers and a lot of capital equipment
Which economic question are these two nations answering and why do the answers differ?
Refer to Scenario 4 . Assume that the state originally spent one-half of its budget on schools and one-half on prisons
What was the production of schools and prisons? Could the same number be achieved after the price of producing prisons falls to $1.5 million and the price of producing schools rises to $2 million? Explain.
Use the following table to answer the question below: The amount of total output produced from various combinations of labor and capital.
If the capital stock is fixed at one unit, how much does the third unit of labor add to total output?
A. 60 B. 80 C. 40 D. 20 E. none of the above