If the Purchasing Power of a Dollar Is Greater Than

question 41

Multiple Choice

If the purchasing power of a dollar is greater than the purchasing power of the yen, purchasing power parity would predict that

• A)in the short run, exchange rates will move to equalize the purchasing power of the dollar and the yen.
• B)in the long run, exchange rates will move to equalize the purchasing power of the dollar and the yen.
• C)in the long run, interest rates will move to equalize the purchasing power of the dollar and the yen.
• D)in the short run, interest rates will move to equalize the purchasing power of the dollar and the yen.
• E)in the short run, Canada will grow more quickly than Japan.

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Definitions:

Elderly

Individuals who are significantly beyond the usual age for retirement, often implying an age at which they receive certain societal or economic benefits like pensions.

Deadweight Loss

An economic inefficiency arising when there's a failure to attain or an impossibility of attaining equilibrium for a particular good or service.

Taxes on Labor

Refers to taxes imposed on wages or salaries earned, impacting the net income of employees.

Second Earners

Refers to individuals in a household who contribute income in addition to the primary breadwinner, often impacting households' labor supply decisions and overall economic dynamics.