A Big Mac costs $4.00 in the United States and 9.00 reals in Brazil. If the exchange rate is 2 reals per dollar, purchasing power parity predicts that
A) the dollar will depreciate as the supply of dollars rises in the long run.
B) the dollar will appreciate in the long run as the demand for the dollars rises.
C) the dollar will appreciate as the demand for dollars falls in the long run.
D) the dollar will depreciate as the demand for dollars falls in the long run.
B
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Suppose Lisa spends all of her money on books and bagels, and a bagel is an inferior good for her. When the price of coffee increases, the
A) consumption of coffee will fall. B) consumption of coffee will rise. C) consumption of coffee will not change. D) Not enough information.
A major prediction of the kinked demand curve model is:
A. Price stability in oligopolies B. Price instability in oligopolies C. Stability of production costs in oligopolies D. Instability of costs in oligopolies