If the prices for the same goods and services are different in two nations, the exchange rate adjusts over the long run to achieve
A) zero net exports for each nation.
B) purchasing power parity between the two currencies.
C) balance of payments account between the two nations equal to zero.
D) a zero current account balance between the two nations.
E) interest rate parity.
B
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Which of the following explains why a firm would be interested in knowing the price elasticity of demand for a good it sells?
A) The price elasticity of demand can be used to determine the impact of changes in income on quantity sold. B) Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit. C) The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue. D) Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change.
All else equal, if individuals save less because inflation lowers returns on savings, this should ________ the supply of loanable funds and ________ the capital stock
A) increase; raise B) increase; reduce C) decrease; raise D) decrease; reduce