A principal reason that purchasing power parity does not hold exactly in practice is
A) that foreign and domestic assets are not perfect substitutes.
B) the existence of non-traded goods.
C) that consumers in different countries have different preferences.
D) that costs of production are not the same in all countries.
B
You might also like to view...
The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total variable cost of producing 18 baseball hats per hour is
A) $200.00. B) $30.00. C) $1.67. D) More information is needed to answer the question.
Refer to the above figure. Suppose the current aggregate demand is represented by AD2. If aggregate demand falls to line AD3, then
A) the new equilibrium will be at j. B) the new equilibrium will be at k. C) the new equilibrium real Gross Domestic Product (GDP) will be x. D) a new price level will be established at a.