Because There Are Sometimes No Substitutes for Traded Goods, This

question 23

Multiple Choice

Because there are sometimes no substitutes for traded goods, this will:

• A)reduce the probability that PPP will hold.
• B)increase the probability that PPP will hold.
• C)increase the probability the IFE will hold.
• D)B and C

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Definitions:

Income

The money received, usually on a regular basis, for work or through investments.

Interest Rate

The segment of a loan levied as interest upon the borrower, customarily indicated as an annual proportion of the loan yet to be repaid.

Utility Function

A representation in economics that expresses the preference ordering of various utility levels or consumption bundles by individuals or firms.

Consumption

The use of goods and services by households or individuals, often analyzed to understand economic activity and consumer behavior.