Purchasing power parity exists when domestic currency:
a. maintains a fixed exchange rate with foreign currency.
b. is not convertible into foreign currency.
c. buys more goods at home than abroad.
d. buys as many goods at home as it does abroad.
e. appreciates in value against foreign currency.
d
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What did economists Robert Jensen and Nolan Miller determine must be true for a good to be a Giffen good, where the income effect is larger than its substitution effect?
What will be an ideal response?
The cyclically-adjusted surplus as a percentage of GDP is 1 percent in Year 1. This surplus becomes a deficit of 2 percent of GDP in Year 2. It can be concluded from Year 1 to Year 2 that:
A. Fiscal policy turned more expansionary B. Fiscal policy turned more contractionary C. GDP increased D. GDP decreased