Discuss the short-run and long-run views of PPP. Make sure that you explain the underlying adjustment mechanism and theoretical reasoning for each view when answering the question
Which view, do you think, is more likely to represent the real world?
If PPP holds in the short run, then capital flows change money supplies and prices quickly. If PPP holds only in the long run, then prices must adjust slowly following a faster adjusting exchange rate.
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Which of the following expenditures would be included in GDP for this year?
a. The purchase of a new car. b. The purchase of a new tire by General Motors for a new car. c. The purchase of a used car. d. All of these would be included.
Maurice faces a progressive federal income tax structure that has the following marginal tax rates: 0 percent on the first $10,000 . 10 percent on the next $10,000 . 15 percent on the next $10,000 . 25 percent on the next $10,000 . and 50 percent on all additional income. In addition, he must pay 5 percent of his income in state income tax and 15.3 percent of his labor income in federal payroll taxes. Maurice earns $60,000 per year in salary and another $10,000 per year in non-labor income. What is his average tax rate?
a. 17.19 percent b. 46.69 percent c. 48.87 percent d. 56.01 percent