The purchasing power parity theory is useful in making ____ predictions about exchange rates and their fluctuations
a. long-run
b. intermediate-run
c. medium-run
d. short-run
a
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Which of the following is NOT a reason why real GDP can be expanded beyond a level consistent with its long-run growth path in modern Keynesian analysis?
A) Higher prices induce firms to hire more workers. B) The existing capital stock can be used more intensively. C) Prices and wages are flexible, allowing for needed adjustments. D) In the short run, existing workers can work more hours.
Suppose that in October the price of a cup of cafe latte was $2.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 600 lattes were consumed. What might have caused this change?
A) The price of coffee beans (an input of production of cafe lattes) fell. B) The price of coffee beans (an input of production of cafe lattes) rose. C) The price of tea (a substitute for cafe lattes) rose. D) The price of tea (a substitute for cafe lattes) fell.