The cross price elasticity of demand between two goods will be positive if
A) the two goods are complements.
B) the two goods are substitutes.
C) the two goods are luxuries.
D) one of the goods is a luxury and the other is a necessity.
B
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Government purchases currently take up about
A) 20 percent of U.S. GNP, and this share has not changed much since the late 1950s. B) 38 percent of U.S. GNP, and this share has not changed much since the late 1950s. C) 18 percent of U.S. GNP, and this share has been increasing since the late 1950s. D) 18 percent of U.S. GNP, and this share has been decreasing since the late 1950s. E) 25 percent of U.S. GNP, and this share has been decreasing since the late 1950s.
Suppose the current exchange rate between the Japanese yen and the U.S. dollar is 80 yen = $1. Suppose you can buy more goods in the United States with $10 than you can in Japan with 800 yen. Japan's GDP in dollars will be
A) greater if the current exchange rate, rather than the purchasing power parity exchange rate, is used to convert yen to dollars. B) less if the current exchange rate, rather than the purchasing power parity exchange rate, is used to convert yen to dollars. C) the same whether the current exchange rate or the purchasing power parity exchange rate is used to convert yen to dollars. D) more accurate if the current exchange rate, rather than the purchasing power parity exchange rate, is used to convert yen to dollars.