Question
Choose from the answer from the Highlighted below: 1a.According to Tyler Cowen (based on a study by Rogoff) deviations from purchasing power parity (based on
Choose from the answer from the Highlighted below:
1a.According to Tyler Cowen (based on a study by Rogoff)
deviations from purchasing power parity (based on entire price indices) appear to diminish at a relatively slow rate of 15% per year.
deviations from purchasing power parity (based on entire price indices) are typically eliminated within a year
deviations from purchasing power parity (based on entire price indices) are persistent--changing little at all--for decades.
deviations from purchasing power parity (based on entire price indices) appear to diminish at a relatively fast rate of 50% per year.
deviations from purchasing power parity (based on entire price indices) have a relatively slow half-life of about 10 years, i.e. a deviation is reduced by 50% about every 10 years.
1b Bela Balassa's theory would explain that there are less personal servants hired by middle class families in Norway than in Mexico because
Mexican servants are being exploited.
Norwegian have a more elastic demand for services provided by servants than Mexicans.
Norwegian have a more inelastic demand for services provided by servants than Mexicans.
Norwegian servant wages are driven up by the higher wages (compared to Mexico) offered in the oil sector, which has higher labor productivity than the oil sector in Mexico.
as servants, Norwegian servants are more productive than Mexican servants.
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