If purchasing power parity holds, then if the price of a basket of goods in the U.S. rose from $1.000 to $1,200 and the price of the same basket in Poland rose from 6,400 Polish zloty to 8,000 zloty, then
a. the nominal exchange rate would be unchanged and the real exchange rate would appreciate.
b. the U.S. dollar would appreciate and the real exchange rate would stay the same.
c. the nominal exchange rate would be unchanged and the real exchange rate would depreciate.
d. the U.S. dollar would depreciate and the real exchange rate would be unchanged.
b
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What will be an ideal response?
Which of the following is not a common rationale for government involvement in education?
a. Public education produces a positive inframarginal externality. b. Public provisions of education makes students into better citizens. c. Public financing of education is necessary on equity grounds. d. all of the above
Government policies such as price controls, rent controls, and quantity restrictions have the effect of
A) promoting the attainment of an unhindered market equilibrium. B) allowing quantity demanded to adjust to equality with aggregate supply. C) creating excess quantities demanded or excess quantities supplied. D) pushing prices to market clearing levels more rapidly than private market forces.
If the Fed purchases government securities in the open market, _____
a. the money supply will decrease b. the money supply will increase only if the seller of those securities is a commercial bank c. the money demand will increase immediately d. the money demand will decrease immediately e. the money supply will increase through the commercial banking system regardless of who the seller is