Question Details

The purchasing power parity hypothesis 



1.	An example of a time series data set is one for which the:
Answer
A.	data would be collected for a given firm for several consecutive periods (e.g.,
months).
B.	data would be collected for several different firms at a single point in time.
C.	regression analysis comes from data randomly taken from different points in time.
D.	data is created from a random number generation program

2.	Smoothing techniques are a form of ____ techniques which assume that there is an underlying pattern to be found in the historical values of a variable that is being forecast.
Answer
A.	opinion polling
B.	barometric forecasting
C.	econometric forecasting
D.	time-series forecasting

3.	Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because
Answer
A.	out-of-pocket costs of production decline
B.	free trade areas protect infant industries
C.	economies of scale are present
D.	manufacturers face diminishing returns
E.	more goods are available for consumption

4.	Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because
Answer
A.	out-of-pocket costs of production decline
B.	free trade areas protect infant industries
C.	economies of scale are present
D.	manufacturers face diminishing returns
E.	more goods are available for consumption

5.	The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time

Answer
A.	increase exports
B.	reduce the competitive pressure on prices
C.	lower the value of the currency in the country with the higher inflation rate
D.	increase foreign aid
E.	increase the speculative demand for the currency




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