The PPP theory fails in reality because
A.transport costs and restrictions onB.monopolistic or oligopolistic practices in goodsC.the inflation data reported in different countries are based on different commodityD.A, B, ...
Suppose Russia’s inflation rate is 200%
Suppose Russia’s inflation rate is 200% over one year, but the inflation rate in Switzerland is only 2%. According to relative PPP, what should happen over the year to the Swiss f...
You are planning a 30-day vacation on Langkawi Island,
You are planning a 30-day vacation on Langkawi Island, Malaysia, one year from now. The present charge for a luxury suite plus meals in Malaysian ringgit (RM) is RM1,050/day. The M...
The J-curve illustrates which of the following?
A.The effects of depreciation on the home country's economyB.The immediate increase in the current account caused by a currency depreciationC.The gradual adjustment of home prices ...
The Marshall-Lerner Condition states that
A.depreciation always has a favorable effect on the currentB.import dependency reinforces the effects of depreciation on the current account.C.high elasticity of exports is suffici...
If the economy starts in long-run equilibrium,
If the economy starts in long-run equilibrium, a permanent fiscal expansion will causeA.an increase in exchange rate,B.a decrease in exchange rate,C.an increase in output,D.a decre...
In the long-run equilibrium,
In the long-run equilibrium, after a permanent money-supply increase there follows:A.an increase in exchange rate,B.a decrease in exchange rate,C.an increase in output,D.a decrease...
Which of the following are true in terms
Which of the following are true in terms of the current account balance?A.Monetary expansion increases the current accountB.Monetary expansion decreases the current accountC.Fiscal...
In the short run, with prices fixed,
In the short run, with prices fixed, how would an increase in government spending affect the DD-AA schedule?A.It will increase output and appreciate theB.It will increase output an...
How is the AA schedule derived?
A.The AA schedule has a positive slope because an increase in output leads to a depreciation of theB.The AA schedule has a negative slope because an increase in output leads to a d...
Imagine that the economy is at a point on the DD-AA
Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD, where both the output and asset markets are out of equilibrium. Which first action is tru...
Which one of the following statements is the most accurate?
A.An increase in disposable income improves the currentB.An increase in disposable income does not affect the currentC.An increase in disposable income worsens the currentD.An incr...
