What is the law of supply? What does this law imply about the shape of the supply curve?
What will be an ideal response?
The law of supply states that, holding everything else constant, an increase in price causes an increase in quantity supplied. The positive relationship between price and quantity supplied gives rise to an upward-sloping supply curve.
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Purchasing power parity suggests that the exchange rate between two currencies reflects differences in the overall price levels in the two countries
Indicate whether the statement is true or false
Suppose the nominal interest rate is 10 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 6 percent. At the end of the year, you have earned:
A. a real rate of return of 4 percent. B. an increase in your purchasing power. C. a nominal increase in your savings of $100. D. All of these statements are true.