Which of the following statements is correct?
A) PPP is a theory of exchange rate determination.
B) Inflation differentials cause changes in exchange rates.
C) PPP is an equilibrium relationship between two endogenous variables.
D) PPP, or the law of one price, should hold well for individual goods.
C
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Demand-pull inflation occurs
A) when the aggregate supply curve shifts to the right, while aggregate demand remains stable. B) when the aggregate demand curve shifts to the right, while aggregate supply remains stable. C) when the aggregate demand curve shifts to the left, while aggregate supply remains stable. D) when the aggregate supply curve shifts to the left, while aggregate demand remains stable.
What is the appropriate degree of abstraction?
a. The more detail there is, the better. b. The detail should be minimized in order to avoid all complexity. c. Abstraction is unnecessary, and should be avoided. d. Abstraction is the essence of analysis, and is pursued for its own sake. e. It depends on the objective of the analysis.