The theory of purchasing power parity cannot fully explain exchange rate movements in the short run because
A) all goods are identical even if produced in different countries.
B) monetary policy differs across countries.
C) some goods are not traded between countries.
D) fiscal policy differs across countries.
C
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What are rational expectations, and how might rational expectations make monetary policy ineffective?
What will be an ideal response?
The owner of a restaurant is considering lowering menu prices to draw in more customers. He is debating between lowering the price for the steak entrée or the salmon entrée. When he lowered prices last year, a $2.00 decrease in price for the $15
steak resulted in a growth in steak sales from 75 per week to 100 per week. A $2.50 decrease in the price of the $17 salmon entrée increased sales from 40 to 75 meals per week. Which entree should he choose to put on sale? Please provide the best answer for the statement.