Qualification > Commerce
economics mcqs
Freaked12:
--- Quote from: zxcvbnm on June 03, 2010, 03:26:43 pm ---i need help in the following questions :
june 09---26,30
june 08---15,23
nov 06 ---8,26
june 06---19
nov 05 ---25
nov 04---8
june 04---25
nov 03---22
june 03---19
--- End quote ---
June 09
26=Break down this question into parts
Inelastic demand means whatever the price the demand will change slowly
Then it says countries decide to increase supply
shifting the supply curve which decreases the price.So inflation will be less likely
Price decreases and demand stays the same so balance of trade improves because it takes into account the expenditure.
When price decreases,demand increases as well
so answer is A
30-if you know the marshal learner condition you would be able to answer this.
It states then when price of imports rise(due to devaluation) and if it is price elastic in nature then imports will decline as demand is more elastic in nature
zxcvbnm:
thankyou so much for your help!
Freaked12:
--- Quote from: Freaked12- on June 03, 2010, 05:59:21 pm ---June 09
26=Break down this question into parts
Inelastic demand means whatever the price the demand will change slowly
Then it says countries decide to increase supply
shifting the supply curve which decreases the price.So inflation will be less likely
Price decreases and demand increases but only slightly so balance of trade improves because it takes into account the expenditure.
When price decreases,demand increases as wellso answer is A
30-if you know the marshal learner condition you would be able to answer this.
It states then when price of imports rise(due to devaluation) and if it is price elastic in nature then imports will decline as demand is more elastic in nature
--- End quote ---
zxcvbnm:
please explain purchasing power parity theory!
Freaked12:
--- Quote from: zxcvbnm on June 03, 2010, 06:31:27 pm ---please explain purchasing power parity theory!
--- End quote ---
According to wiki
In its "absolute" version, the purchasing power of different currencies is equalized for a given basket of goods. In the "relative" version, the difference in the rate of change in prices at home and abroad - the difference in the inflation rates - is equal to the percentage depreciation or appreciation of the exchange rate.
The PPP exchange-rate calculation is controversial because of the difficulties of finding comparable baskets of goods to compare purchasing power across countries.
Estimation of purchasing power parity is complicated by the fact that countries do not simply differ in a uniform price level; rather, the difference in food prices may be greater than the difference in housing prices, while also less than the difference in entertainment prices. People in different countries typically consume different baskets of goods. It is necessary to compare the cost of baskets of goods and services using a price index. This is a difficult task because purchasing patterns and even the goods available to purchase differ across countries. Thus, it is necessary to make adjustments for differences in the quality of goods and services. Additional statistical difficulties arise with multilateral comparisons when (as is usually the case) more than two countries are to be compared.
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