Firms still have the incentive to cheat even after a game leads to cooperation

An increase in pollution has caused a permanent increase in the rate of capital depreciation. This would cause

A) an increase in the capital—labor ratio. B) output per worker to fall. C) a decline in consumption per worker. D) the capital—labor ratio to be unaffected.

If the U.S. inflation rate is 3 percent annually and the Japanese inflation rate is 1 percent annually, by what percent would the dollar price of the yen need to change according to purchasing power parity?

a. Appreciate by 2 percent b. Appreciate by 1 percent c. Depreciate by 2 percent d. Appreciate by 3 percent e. Depreciate by 1 percent