Adam Smith asserted that a person should never attempt to make at home
a. what it will cost him more to make than to buy.
b. any good in which that person does not have an absolute advantage.
c. any luxury good.
d. any necessity.
a
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The Big Mac Index uses the price of a Big Mac in local currencies around the world as a way of testing the purchasing power parity theory. Which of the following is a partial explanation for why the PPP theory does not apply to the Big Mac Index?
a. Wages do not differ across countries b. Trade barriers, such as tariffs and quotas on beef, may distort local prices c. Taxes do not distort local prices d. Rent does not vary substantially across countries e. The Big Mac is traded internationally
The demand for borrowed funds is
A. directly related to the interest rate. B. inversely related to the growth in gross domestic product. C. a derived demand. D. leads to derived demand for capital goods.