Purchasing power parity does NOT provide accurate predictions of exchange rates because
A) almost all goods and services are traded across nations.
B) governments currently fix exchange rates.
C) firms are unable to set prices differently across nations.
D) non-traded goods account for approximately 50 percent of the value of production in an economy.
D
You might also like to view...
Suppose the market price of zinc doubles. Which of the following scenarios is most likely?
A) The demand for zinc miners will increase, raising the market wage rate. B) The demand for zinc miners will decrease, reducing the market wage rate. C) The demand for zinc will increase, raising the market price further. D) The demand for zinc miners will decrease, reducing the market price back to its original price.
Refer to the above figure. If the government uses rate-of-return regulation for the natural monopolist, the firm will charge price
A. P1 and sell Q4 units. B. P3 and sell Q3 units. C. P5 and sell Q1 units. D. P2 and sell Q1 units.