Which of the Following Is False

question 30

Multiple Choice

Which of the following is false?

• A)Exchange rates can and do vary significantly over time.
• B)Changes in productivity, economic growth, market structures, and technologies across countries, can cause exchange rates to vary.
• C)The purchasing power parity theory is always true in the long run after full adjustment of exchange rates has occurred.
• D)Shifts in factor supplies causing commodity price shocks and changes in tastes among countries can also affect exchange rates.

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Definitions:

Lump-sum Tax

A fixed tax amount not dependent on the taxpayer's income level or financial transactions.

Economic Efficiency

A state where every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Incentives

Incentives are rewards or penalties that motivate individuals or entities to act in a certain way, often used to influence economic behavior and decision-making.

Ability-to-pay Principle

A tax design principle that suggests taxes should be levied according to an individual's or entity's ability to bear them.