The decrease in total surplus that results from a market distortion, such as a tax, is called a

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.

When firms are faced with making strategic choices to maximize profit, economists typically use

a. the theory of monopoly to model their behavior. b. the theory of aggressive competition to model their behavior. c. game theory to model their behavior. d. cartel theory to model their behavior.