Internal balance describes A) equilibrium in the goods market. B) a desired level of trade or capital flows. C) where the IS and BP curve intersect. D) a domestic rate of growth consistent with a low unemployment rate. ANSWER D
Date: September 10th, 2020
A monopoly firm will maximize profits by producing where A) marginal revenue is the same in domestic and foreign markets. B) prices are the same in domestic and foreign markets. C) marginal revenue is higher in foreign markets. D) marginal revenue is higher in the domestic market. E) total revenue from domestic and foreign sales […]
Date: September 10th, 2020
Which of the following statements is the MOST accurate? A) If PPP holds true, then the law of one price holds true for every commodity as long as the reference baskets used to reckon different countries’ price levels are the same. B) If the law of one price holds true for every commodity, PPP must […]
Date: September 10th, 2020
If the world terms of trade equal those of country F, then A) country H but not country F will gain from trade. B) country H and country F will both gain from trade. C) neither country H nor F will gain from trade. D) only the country whose government subsidizes its exports will gain. […]
Date: September 10th, 2020
Merchandise exports minus imports equal the A) basic balance. B) liquidity balance. C) official settlements balance. D) balance of trade. ANSWER D
Date: September 10th, 2020
International trade based solely on internal scale economies in both countries is likely to be carried out by A) monopolists in each country. B) a relatively large number of price competing firms. C) a relatively small number of price competing firms. D) a relatively small number of imperfect competitors. E) a large number of oligopolists […]
Date: September 10th, 2020
According to Ricardo, a country will have a comparative advantage in the product in which its A) labor productivity is relatively low. B) labor productivity is relatively high. C) labor mobility is relatively low. D) labor mobility is relatively high. E) labor is outsourced to neighboring countries. ANSWER B
Date: September 10th, 2020
Import substitution policies make use of A) tariffs that discourage goods from entering a country. B) quotas applied to goods that are shipped abroad. C) production subsidies granted to industries with comparative advantage. D) tax breaks granted to industries with comparative advantage. E) production facilities provided by industrialized countries. ANSWER A
Date: September 10th, 2020
The argument that strategic planning is not likely to be practical due to insufficient information means that A) because of trade secrets, the government does not know true cost relationships in any given industry. B) if the government had all the relevant information in a given industry then it could decide whether a subsidy would […]
Date: September 10th, 2020
What challenges does the European Union face in the short, medium, and long run? What will be an ideal response? ANSWER In the short to medium run, the EU must continue to create convergence in income and living standards between its poorest and most well off members. In the medium run, the EU must […]
Date: September 10th, 2020
