Suppose the exchange rate is such that 1 U.S. dollar equals 1 euro in New York and 0.9 euros in Paris. An arbitrageur would sell euros
a. in New York and buy U.S. dollars in Paris
b. in Paris and buy U.S. dollars in New York
c. in New York while buying them in Paris
d. in Paris while buying them in New York
e. at the same price in both cities
D
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If actual inflation differs from expected inflation, what is the slope of the aggregate supply curve?
a. It is horizontal in the short and long run. b. It is vertical in the short and long run. c. It is vertical in the short run and upward sloping in the long run. d. It is upward sloping in the short run and vertical in the long run.
Albert’s idea about the buying preferences of low-income people in Chicago has been tested and accepted for the time being as accurate. It has become a(n) ______.
a. theory b. hypothesis c. correlation d. assumption