If the GDP deflator in the United States is 114, and the GDP deflator in Ukraine is 142, which of the following changes would the theory of purchasing power parity predict? (The Ukrainian currency is the hryvnia.)
A) The demand for the dollar will fall since the dollar is overvalued.
B) The demand for the dollar will rise since the dollar is undervalued.
C) The supply of the dollar will fall since the dollar is undervalued.
D) No prediction regarding changes in the demand or supply of the dollar can be made without information on the exchange rate between the United States and Ukraine.
D
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A study of consumers in an area found that as family income increased from $25,000 per year to $35, 000 per year, other factors held constant, the number of houses purchased increased from 7,000 per year to 11,000 per year. This finding indicates an income elasticity of demand coefficient for housing over this family income range of:
a. 0.22. b. 0.75. c. 1.33. d. 4.50.
For those nations who fixed their currencies' exchange rates to the U.S. dollar, the rise of the dollar during the 90's was very good news,
a. True b. False Indicate whether the statement is true or false