If the exchange rate between the U.S. dollar and the Mexican peso (pesos per dollar) is less than the relative purchasing power between the two countries, which of the following would be true?
A) Purchasing power parity predicts that the dollar is overvalued as traders take advantage of arbitrage opportunities.
B) Purchasing power parity predicts that the value of the dollar will fall as traders take advantage of arbitrage opportunities.
C) There are opportunities for profit by purchasing goods in the United States and then selling them in Mexico.
D) There are no arbitrage opportunities for which traders can take advantage.
C
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The Confederate government
(a) failed to increase its external debt and thus produced domestic inflation. (b) did not make the Confederate currency legal tender. (c) failed to raise sufficient resources because of unwillingness to increase the supply of paper money. (d) did none of the above.
The aspect of the Second Banking Crisis of the 1930s that distinguished it from the First Banking Crisis was that during the second crisis ___
a. the Federal Reserve finally decided to act as lender of last resort b. the stock market boom finally came to an end with the crash c. banks in all regions of the country failed d. President Roosevelt asked Congress to establish Federal deposit insurance
Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. Calculators Per HourComputers Per HourSmith10010Jones1206Suppose Smith and Jones begin by producing 0 computers and 220 calculators per hour. If they wish to produce 2 computers and 200 calculators per hour efficiently, then Smith should spend ________, and Jones should spend ________.
A. 12 minutes making computers and 48 minutes making calculators; 1 hour making calculators B. 48 minutes making computers and 12 minutes making calculators; 1 hour making calculators C. 1 hour making calculators; 10 minutes making computers and 50 minutes making calculators D. 30 minutes making each; 30 minutes making each
Which of the following statements is true?
A. Expansionary monetary policy tends to lower the exchange rate of an economy. The effects of expansionary fiscal policy are unclear. B. Expansionary fiscal and monetary policy both tend to increase the exchange rate of an economy. C. The effects of both expansionary fiscal and monetary policy on the exchange rate of an economy are unclear. D. Expansionary fiscal policy tends to increase the exchange rate of an economy. The effects of expansionary monetary policy are unclear.