If inflation in Mexico is lower than it is in the United States,
A) the purchasing power of the dollar in buying American goods will rise relative to the peso.
B) the value of the peso will rise in the long run.
C) the value of the dollar will rise in the long run.
D) the purchasing power of the peso in buying Mexican goods will fall relative to the dollar.
B
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A market is defined as
A) the physical place where goods (but not services) are sold. B) the physical place where goods and services are sold. C) any arrangement that brings buyers and sellers together. D) a place where money is exchanged for goods. E) another name for a store.
Suppose capital and labor are used in fixed proportions so that each machine requires only one worker. If a decline in the price of capital occurs, then the demand for labor will:
A. decrease solely because of the substitution effect. B. increase solely because of the substitution effect. C. increase solely because of the output effect. D. decrease solely because of the output effect.