Purchasing power party is limited by select one income inequality the disparity

Question

Purchasing power party is limited by select one income inequality the disparity of economic environments between countries the costs of trading, transacting and shuffling resources the diverse resources abundances Which of the following is true regarding the reserve ratio and the money multiplier select one the smaller the reserve ratio the bigger the money multiplier the money multiplier only exists when the reserve ratio is zero the bigger the reserve ratio the bigger the money multiplier the money multiplier equals reserve ratio x 100

Explanation / Answer

Answer:

Question 31.

Answer (b)

Purchasing power parity refer to finding the values (in USD) of a basket of consumer goods that are present in each country (such as milk, power tools, pencils, orange juice etc). If that very same basket basket costs $100 in the US and $200 in England, then the purchasing power parity exchange rate is 1:2.

Why price differentials persist between countries for the same type of goods has been studied extensively and it is found that most often the fundamental reason for such differences is in the economic environments obtaining in those countries. This environment includes geography, governance, aid flows, and labor-market policies levels of income inequality and so on...) Competitiveness of manufacturing processes and level of technological development also impacts the differences.

Question 32:

Answer (a)

This result is obtained by observing the key fact that , the money multiplier is based on the amount of money left in the banking system that can be lent out . This is in turn impacted by the proportion of Federal Reserve’s that is mandated. If the Fed demands a higher reserve ratio on every deposit with the bank, the bank is left with lower amounts of money that can be lent out to borrowers. Thu sristricts the amount of total credit created.

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