Purchasing Power Parity Does Not Hold in the Short to Medium

question 68

Multiple Choice

Purchasing power parity does not hold in the short to medium run because

• A)exports don't equal imports.
• B)exchange rates fluctuate too much.
• C)some goods aren't internationally traded.
• D)most business cycles are caused by shocks to aggregate demand.

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Definitions:

Union Shop

A workplace where employees are not required to join the union in order to be hired, but must join within a certain period of being employed and remain members as a condition of employment.

Closed Shop

A workplace where only workers who are already members of the union can be hired.

Agency Shop

A workplace where employees are not required to join the union, but must pay union dues as the union negotiates on behalf of all employees.

Rand Formula

An option in a collective agreement enabling employees to retain the right not to join the union, though they are still required to pay union dues; also known as an agency shop.