Which of the following describes the purchasing power parity theory of exchange rate determination?
a. The exchange rate will adjust in the long run until the interest rate is roughly the same in both countries.
b. The exchange rate will adjust in the long run until real GDP per capita is roughly the same in both countries.
c. The exchange rate will adjust in the long run until the average price of goods is roughly the same in both countries.
d. The exchange rate will adjust in the short run until the average price of goods is roughly the same in both countries.
e. Prices adjust in the short run until the exchange rate is roughly the same in both countries.
C
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What happens to the Phillips curve when the expected rate of inflation rises?
A) The curve shifts to the left. B) The curve becomes horizontal. C) The Phillips curve is unaffected. D) The curve shifts to the right.
Refer to Figure 8.1. If Charla and Mirna agree to pay each other $350 to install the pollution-control device on their heating systems, the dominant strategy for the players would be for Charla to play ________ and for Mirna to play ________
A) Install; Install B) Install; Don't Install C) Don't Install; Install D) Don't Install; Don't Install
If C + I = Y and Y - C = S, then
A) I = 0. B) S = 0. C) S = I. D) Y = S + I.
Which of the following goods is the best example of a public good?
a. garbage-collection services that are provided by a municipal government b. music that is broadcast over the airwaves by a privately-owned FM radio station c. electricity that is provided to farmhouses by a rural electric cooperative d. cable TV services that are provided by a privately-owned firm that is regulated by the government of the city in which it operates