The foreign exchange rate
A. is not relevant when comparing the GDPs of various countries.
B. is the price of one currency in terms of another.
C. is the same as the price of a product in U.S. dollars.
D. is the price of one good or service as compared to a similar good or service.
Answer: B
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The fact that movie star Tom Cruise's salary is much higher than the salary earned by a Nobel prize winning economics professor can be explained by the
a. existence of noncompeting labor markets b. elimination of noncompeting labor markets c. failure of the market to reward talent fairly d. fact that wage rates cannot reflect the influence of education in labor markets e. willingness of some people to accept a lower wage rate in order to do what they like most to do
Supply-side tax cuts designed to increase investment spending are attractive in theory, but in practice
a. the effect is the opposite of what theory suggests. b. are less useful, because they take a long time to increase the capital stock. c. they have no effect on the capital stock in the short or long run. d. are powerful in the short run as capital stock rapidly increases, but the effect tapers off in the long run.