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.
Answer: D
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Macroeconomics Chapter 8
- According to the table shown, if Bob is earning $30,000 in the United States and Bill is earning $40,000 in Mexico, what can be said about their standards of living?
- According to the information in the table shown, if someone were earning $50,000 in Australia, approximately what would she need to earn in the United States to enjoy the same standard of living?
- According to the information in the table shown, if someone were earning $30,000 in the United States, approximately what would they have to earn in China to have the same standard of living?
- According to the information in the table shown, if someone were earning $20,000 in Mexico, approximately what would he need to earn in the United States to enjoy the same amount of goods and services?
- The information in the table shown:
- According to the information in the table shown, if someone were to make $35,000, she would be able to buy more goods and services if she lived in:
- According to the information given in the table shown, if someone makes $40,000 in the U.S., what would his salary need to be in Mexico to maintain the same standard of living?
- Making international comparisons of purchasing power:
- PPP-adjustment:
- PPP-adjustment involves:
- The ICP index:
- The index used for international price comparisons is the:
- The Big Mac index compares:
- The Big Mac index:
- Comparing the cost of the same basket of goods in different locations:
- An example of a nontradable good is:
- An example of a nontradable good is:
- An example of a nontradable good is:
- Trade restrictions can prevent purchasing power parity from holding because:
- Transactions costs prevent purchasing power parity from holding because:
- Nontradables:
- Trade restrictions:
- Transactions costs are:
- The idea of purchasing power parity:
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