Use the Following to Answer Questions

question 302

Multiple Choice

Use the following to answer questions :
Scenario: Purchasing Power Parity
A car costs $30,000 in the United States and the exchange rate is $1 = £0.50. The same car costs £12,000 in Britain.
-(Scenario: Purchasing Power Parity) Look at the scenario Purchasing Power Parity. To have purchasing power parity, the pound must:

• A)appreciate.
• B)depreciate.
• C)remain constant.
• D)be purchased in foreign exchange markets.

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Definitions:

Social Overhead Capital

Capital invested in public infrastructure and services such as transportation, utilities, and education systems, essential for economic development.

Power Plants

Facilities that generate electricity by converting various forms of energy into electrical power.

Brain Drain

The emigration of highly trained or qualified individuals from a particular country or region, often due to better opportunities or living conditions elsewhere.

Economic Efficiency

A condition in which a system is capable of producing maximum desired outputs from given inputs without wastage, reflecting optimal allocation of resources.