ECO 561 Final Exam: ECO 561 - If a firm in a purely competitive industry

27) The quantity theory of money
states that
A. the money supply divided by the
velocity of money equals the price level
divided by real output
B. the money supply times the velocity
of money equals the price level times
real output
C. the money supply times the price level
equals real output divided by the velocity
of money
D. the money supply times the price level
equals real output times the velocity of
money
28) Suppose that U.S. prices rise
4% over the next year while
prices in Mexicorise 6%.
According to the purchasing
power parity theory of exchange
rates,what should happen to the
exchange rate between the dollar
and the peso?
A. The dollar should depreciate.
B. The peso should appreciate.
C. The peso should depreciate.
D. The dollar will be revalued.
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