If Purchasing-Power Parity Holds,a Dollar Will Buy

question 82

Multiple Choice

If purchasing-power parity holds,a dollar will buy

• A)more goods in foreign countries than in the United States.
• B)as many goods in foreign countries as it does in the United States.
• C)fewer goods in foreign countries than it does in the United States.
• D)None of the above is implied by purchasing-power parity.

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Definitions:

Excise Tax

A tax applied to specific goods, services, or activities, often with the intention of reducing consumptions, such as taxes on tobacco or alcohol.

Tax Incidence

The study of who ultimately bears the economic burden of a tax, whether producers or consumers.

Inelastic Demand

A situation where the demand for a product does not significantly change with a change in its price.

Excise Tax

A tax levied on the sale of particular goods and services, such as alcohol, tobacco, and gasoline.