In the model of monopolistic competition, if firms have ________ average cost curves, then opening trade will ________ the total number of firms and ________ the average price. A) downward sloping; decrease; decrease B) downward sloping; decrease; increase C) downward sloping; increase; decrease D) upward sloping; decrease; increase E) upward sloping; increase; decrease ANSWER […]
Credit entries on the Balance of Payments are the entries that would A) mean a loss of foreign exchange. B) bring foreign exchange into the country. C) indicate a surplus exists. D) exist at the bottom line after all accounts are totaled. ANSWER B
If two countries have identical production possibility frontiers, then trade between them is likely to be beneficial if A) their supply curves are identical. B) their cost functions are identical. C) their demand conditions are identical. D) their incomes are identical. E) their demand functions differ. ANSWER E
Fiscal policy is most effective when exchange rates are fixed. Indicate whether the statement is true or false ANSWER TRUE
Intraindustry trade tends to be more controversial than interindustry trade. Indicate whether the statement is true or false ANSWER FALSE
If countries have similar factors of production and similar productivities, most of their trade is likely to be intraindustry. Indicate whether the statement is true or false ANSWER TRUE
If the Costa Rican colone is expected to depreciate in the future, it will temporarily appreciate as people move to take advantage based on this expectation. Indicate whether the statement is true or false ANSWER FALSE
If Juana contracts to buy U.S. office equipment in U.S. dollars and her domestic currency depreciates against the U.S. dollar between the time the contract is signed and the bill is paid, she will wind up paying less for the equipment because she stayed in the spot market. Indicate whether the statement is true or […]
At higher income levels the interest rate must be lower to achieve money market equilibrium. Indicate whether the statement is true or false ANSWER FALSE
In today’s world markets, poor developing countries tend to rely primarily on exports of A) agricultural products. B) primary products. C) mineral products. D) manufactured products. E) high-tech products. ANSWER D
