101.The idea of purchasing power parity:
A. always holds.
B. rarely holds.
C. explains why standards of living have changed over time.
D. explains how standards of living have changed over time.
102.Transactions costs are:
A. the time and energy involved with creating an exchange.
B. often cited as a reason why purchasing power parity doesn’t hold.
C. usually higher when transactions take place internationally.
D. All of these statements are true.
103.Trade restrictions:
A. increase the cost or difficulty of making exchanges across national borders.
B. discourage people from fully taking advantage of lower prices in other countries.
C. can explain why purchasing power parity doesn’t typically hold.
D. All of these statements are true.
104.Nontradables:
A. are goods or services that can’t be taken from place to place very easily or at all.
B. are goods or services that are cultural specific and not typically traded for that reason.
C. are goods or services that are not allowed across a country’s borders.
D. are goods or services that are not allowed to leave a country.
105.Transactions costs prevent purchasing power parity from holding because:
A. they make creating exchanges too costly in some places.
B. they include the expense of transporting the goods to be sold in another country.
C. the price of a good sold in another country must include the cost of getting it there, which can be high and cause a large price differential.
D. All of these statements are true.
106.Trade restrictions can prevent purchasing power parity from holding because:
A. the time and energy of importation paperwork can add to the cost of the good sold.
B. tariffs can add to the cost of the good sold.
C. they can add costs to the selling price because they add to the seller’s cost.
D. All of these statements are true.
107.Nontradables are cited as a reason why purchasing power parity doesn’t hold because:
A. goods that you can’t transport cannot be sold for a profit elsewhere, even if the price differs in different locations.
B. there is no economic opportunity to profit if the goods cannot be sold in another market for another price.
C. location-specific goods are impossible to calculate a price elsewhere for.
D. All of these statements are true.
108.An example of a nontradable good is:
A. a bottle of wine from a remote valley in France.
B. a rare gemstone found in South Africa.
C. a haircut by a renowned Italian hairstylist in Florence.
D. All of these would be considered a nontradable good.
109.An example of a nontradable good is:
A. a lead-painted toy from China.
B. a stack of firewood from Montreal, Canada.
C. a dish of handmade pasta in Lucca, Italy.
D. All of these would be considered a nontradable good.
110.An example of a nontradable good is:
A. fire-protection services.
B. a Domino’s pizza.
C. a double-decker bus tour of London.
D. All of these would be considered a nontradable good.
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