If the price of gasoline were $5, many people would stop buying gasoline while others would continue to do so. This would indicate
A) those who are buying gasoline value it at least $5 per gallon.
B) those who are not buying gasoline value it more than $5 per gallon.
C) only those who are extremely wealthy are buying gasoline.
D) the price of gasoline needs to be regulated by the Federal Government.
A
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Suppose that an anti-smoking campaign in Moscow, Russia, is successful so that Muscovites smoke less and chew gum more. Tobacco companies lay off workers, while chewing gum manufacturers employ more workers. This is an example of
a. structural unemployment created by efficiency wages. b. structural unemployment created by sectoral shifts. c. frictional unemployment created by efficiency wages. d. frictional unemployment created by sectoral shifts.
The purchasing power parity theory of exchange rate determination states that
A. in the short run, rates will adjust to parity. B. in the long run, the rate reflects differences in price levels between the two countries. C. in the long run, a government agency sets the rate at parity. D. in the short run, the cost of labor really sets the exchange rate.