If Wisconsin cheddar cheese sells for $3.00 per pound in the United States and for 27.90 pesos in Mexico, what is the exchange rate between the dollar and the peso (assuming PPP holds)?

Potential GDP increased from 4.7 trillion to 16.6 trillion between 1970 and 2013 resulting in economic growth. Also, during this time ________ occurred because ________

A) inflation; aggregate demand decreased by more than potential GDP B) stagflation; aggregate demand increased by more than potential GDP C) deflation; aggregate demand increased by more than potential GDP D) inflation; aggregate demand increased by more than potential GDP E) inflation; aggregate demand increased by less than potential GDP

According to the adaptive expectations theory, after many years of rising prices, people tend to ignore past experience in predicting the future rate of inflation

a. True b. False Indicate whether the statement is true or false