Suppose the current exchange rate between the Japanese yen and the U.S. dollar is 80 yen = $1. Suppose you can buy more goods in the United States with $10 than you can in Japan with 800 yen. Japan's GDP in dollars will be
A) greater if the current exchange rate, rather than the purchasing power parity exchange rate, is used to convert yen to dollars.
B) less if the current exchange rate, rather than the purchasing power parity exchange rate, is used to convert yen to dollars.
C) the same whether the current exchange rate or the purchasing power parity exchange rate is used to convert yen to dollars.
D) more accurate if the current exchange rate, rather than the purchasing power parity exchange rate, is used to convert yen to dollars.
A
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What is the national security argument to support protection from international trade?
A) Domestic firms must be protected until they gain a comparative advantage. B) Any firm necessary in wartime must be protected. C) Foreign producers selling below cost to drive domestic firms bankrupt must be stopped. D) Domestic jobs must be protected from competition from low-paid foreign workers. E) Foreigners selling products in the economy limit the nation's diversity and stability.
Refer to Figure 16-6. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely pursue
A) contractionary fiscal policy. B) expansionary monetary policy. C) expansionary fiscal policy. D) expansionary automatic stabilizers. E) contractionary monetary policy.