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1. What market forces prevent absolute PPP from holding in real economies? Which of these represent unexploited profit opportunities?
2. Why is it better to use a PPP exchange rate to compare incomes across countries than an actual exchange rate?
3. What is relative PPP, and why does it represent a weaker relationship between exchange rates and prices than absolute PPP?
4. What is the real exchange rate, and how are fluctuations in the real exchange rate related to deviations from absolute PPP?
5. If the nominal exchange rate between the Mexican peso and the U.S. dollar is fixed, and there is higher inflation in Mexico than in the United States, which currency experiences a real appreciation and which experiences a real depreciation? Why? What is likely to happen to the balance of trade between the two countries?
Assume the U.S. economy begins in long-run equilibrium. Concerns about global climate change cause the government to significantly restrict the production of electricity form fossil fuels.
What would be the outcome for real GDP and How would you show this fall in investment in the aggregate demand-aggregate supply model, assuming the economy is operating in what, in effect, is a horizontal section of the aggregate supply curve?
Graph the production function, with capital on the horizontal axis, and use your graph to explain the difference between a doubling of the labor force and a doubling of total factor productivity.
Explain how international trade has altered the U. S. domestic manufacturing base. How has it made it more or less competitive?
Choose a market for a good in your area that seems to be a perfectly competitive market. Write four or five substantive paragraphs that describes the market and answers the following questions: Identify the buyers and sellers as well as the goods o..
Refer to the following data on the U.S. consumer price index and answer the questions below. a. Compute the inflation rate for each year 1989-2006. b. Which years were years of inflation c. In which years did deflation occur d. In which years did dis..
All economics textbooks give examples that show diminishing marginal utility as consumption rises-However, it could be argued that a rational buyer should never experience negative marginal utility. Why?
Please explain the reasons that we have to check "heteroskedasticity robust standard errors" when we have heteroskedasticity issue?
Assume you are a financial advisor to an investor whose portfolio consists of 400 shares of Delta Cruise Inc. stock and 10 put options on the same stock.
The government purchases component of GDP does not include spending on transfer payments such as Social Security. Thinking about the definition of GDP, explain why transfer payments are excluded.
some friends of yours have just had a child. thinking ahead and realizing the power of compound interest they are
Level of GDP per effective worker and explain whether this economy is following the Golden rule
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