What is PPP and how does it help us to make valid international comparisons of real GDP?
What will be an ideal response?
PPP is purchasing power parity. To make the most valid international comparisons of real GDP, we need to value each nation's production using the same prices rather than by using exchange rates and the prices within each country because relative prices within different countries can vary widely. As a result, if the real GDP of each country is valued using the same prices then the comparison of real GDP among the countries is more accurate.
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If the Fed reduces the supply of money, the
A. AS curve shifts outward. B. AS curve shifts inward. C. AD curve shifts outward. D. AD curve shifts inward.
The Federal Reserve econometric model emphasizes the impact of the wealth effect on
A) consumption. B) government spending. C) business investment. D) exports.