Evidence on the existence of relative PPP shows that:
A) the evidence for relative PPP is scanty and theory is large discredited
B) the evidence for relative PPP is hit or miss, and so one should exercise cations in using relative PP to predict changes in exchange rates
C) relative PPP is an approximate guide to predicting the relationship between changes in inflation and exchange rates over long periods such as decades
d) relative ppp holds nearly perfectly in the short and long run, are used with great accuracy to make predictions
Ans: C) relative PPP is an approximate guide to predicting the relationship between changes in inflation and exchange rates over long periods such as decades
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The perfectly competitive firm maximizes profits when
A) it produces and sells the quantity at which the difference between marginal revenue and marginal cost is the greatest. B) it produces and sells the quantity at which marginal revenue and marginal cost are equal. C) it produces and sells the quantity at which the difference between average revenue and average cost is the greatest. D) it produces and sells the quantity at which the difference between price and average cost is the greatest.
In recent years, many DVCs have come to realize that:
A. Expanded international trade is harmful to DVCs B. Private capital investment is essential for economic growth in DVCs C. The International Monetary Fund is the major institutional barrier to economic growth D. Government involvement in economic development is the only avenue for economic growth