The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is
a. cigarette smokers often wear cotton shirts
b. when incomes rise, people consume more cotton and tobacco
c. firms can switch from growing tobacco to cotton and vice versa
d. tobacco is an input in the production of cotton
e. cotton and tobacco are unrelated markets in all ways
C
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According to the theory of purchasing power parity, if the inflation rate in England is greater than the inflation rate in Japan,
A) the law of one price has been violated. B) the nominal value of the pound will appreciate against the yen. C) the nominal value of the yen will appreciate against the pound. D) the nominal value of the pound will appreciate against the yen, but only if the two countries are on the gold standard.
The vicious circle of poverty makes it difficult for an LDC to:
a. establish political institutions. b. control inflation. c. save and invest. d. fix its exchange rate.