According to the Text,which of the Following Factors May Make

question 43

Multiple Choice

According to the text,which of the following factors may make the theory of purchasing power parity unrealistic?

• A)Trading countries may stop exchanging goods once prices between them equalize.
• B)Shipping, insurance, and transaction costs may reduce the implication of purchasing power parity.
• C)Prices may not equalize if goods arbitrage is reduced by trade barriers.
• D)The effects of purchasing power parity may not show up until many years have passed.

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Definitions:

Fiscal Year

A one-year period used by governments and businesses for accounting and budget purposes, which may not coincide with the calendar year.

Budget Deficit

The financial situation in which expenditures exceed revenue over a specific period, leading to a shortfall that must be financed through borrowing.

Federal Outlays

Government expenditures, including spending on goods and services, transfer payments, and interest on debt.

Revenues

The total income generated by a business or government from its activities, before any expenses are subtracted.