Compared to a sales tax, a value-added tax is _____
a. easier to calculate
b. harder to collect
c. easier to apply to investment goods
d. easier to monitor
b
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The "Big Mac Theory of Exchange Rates" tests the accuracy of the purchasing power parity theory. In July 2015, the Economist reported that the average price of a Big Mac in the United States was $4.79
In Mexico, the average price of a Big Mac at that time was 49 pesos. If the exchange rate between the dollar and the peso was 13.60 pesos per dollar, explain how it would be profitable to buy Big Macs in Mexico instead of in the United States.
If fiscal policy is used to close an expansionary gap, the _____
a. short-run aggregate supply curve shifts leftward and the price level falls b. short-run aggregate supply curve shifts rightward and the price level increases c. short-run aggregate supply curve shifts rightward and the price level falls d. aggregate demand curve shifts leftward and the price level falls e. aggregate demand curve shifts rightward and the price level falls