The theory of purchasing power parity
A) extends the law of one price to a group of goods.
B) assumes that most changes in nominal exchange rates are the result of changes in real exchange rates.
C) assumes that inflation rates are roughly the same in most countries.
D) was valid only under the gold standard.
A
You might also like to view...
Potential GDP increased from 4.7 trillion to 16.6 trillion between 1970 and 2013 resulting in economic growth. Also, during this time ________ occurred because ________
A) inflation; aggregate demand decreased by more than potential GDP B) stagflation; aggregate demand increased by more than potential GDP C) deflation; aggregate demand increased by more than potential GDP D) inflation; aggregate demand increased by more than potential GDP E) inflation; aggregate demand increased by less than potential GDP
Movie theaters often charge different people different prices for admission. Why don't theaters charge different prices for popcorn and other food items?
A) It is difficult to limit the resale of food items from those who pay low prices to those who would have to pay high prices from the concession stand. B) Once people are in the theater, concession stands have monopoly power and can charge everyone the same high prices for food. C) Although the elasticity of demand for admission differs among customers, most people have the same the elasticity of demand for food items. D) Concession stand personnel are too busy to ensure that different people pay different prices for food items.