Which of the following statements is the MOST accurate about the Law of One Price on Scandinavian ferry lines?
A) Due to menu costs, the Law of One Price does not hold.
B) To avoid arbitrage opportunities, the Law of One Price must hold.
C) Transaction costs of exchanging currency causes the Law of One Price to fail.
D) Transportation costs between ferry lines leads to a violation of the Law of One Price.
E) The physical distance allowed the Law of One Price to hold.
C
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Policymakers have the ability to affect:
A. the economic incidence of a tax burden on the buyer and seller. B. the relative economic incidence of the tax burden on the rich and the poor. C. whether the buyer or seller will bear the actual burden of the tax. D. how the tax is shared between buyer and seller.
A higher real interest rate typically induces consumers to:
a. Save less b. Purchase more imported goods c. Save more d. Purchase more goods that are bought using credit
Under fractional reserve banking system, banks
A. hold more reserves than deposits. B. generally lend out majority of the funds deposited. C. cause the money supply to fall by lending out reserves. D. None of the above is correct.
Frictional unemployment is unemployment reflecting a mismatch of skills and jobs.
Answer the following statement true (T) or false (F)