The theory of purchasing-power parity states that a unit of a country's currency should be able to buy the same quantity of goods in foreign countries as it does in the domestic economy.

Changes in the products for which a nation has a comparative advantage create sectoral shocks leading to an increase in frictional unemployment.

Which of the following statements is supported by evidence in the textbook?

A) Canadian firms spend 40 to 70 percent of their capital budgets on compensation.
B) Properly designed compensation systems usually promote unproductive behaviour.
C) Reward systems should be static and rarely reviewed.
D) Canadian firms spend 40 to 70 percent of their operating budgets on compensation.

Assume that the inflation rate in Canada is 3% over the next four years while the rate in the U.S. is 4% for the same time period. Given this, the U.S. dollar will appreciate relative to the Canadian dollar.

An economic variable that is measured per unit of time,such as spending per year,is known as a:

A) stock variable.
B) periodic variable.
C) dummy variable.
D) flow variable.
E) controlled variable.

Which of the following expressions is correct?

A) accounting profit = economic profit + implicit costs
B) accounting profit = total revenue − implicit costs
C) economic profit = accounting profit + explicit costs
D) economic profit = total revenue − implicit costs