When a country’s currency depreciates A) foreigners find that its exports are more expensive, and domestic residents find that imports from abroad are more expensive. B) foreigners find that its exports are more expensive, and domestic residents find that imports from abroad are cheaper. C) foreigners find that its exports are cheaper; however, domestic residents […]
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
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 […]
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 […]
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. […]
Merchandise exports minus imports equal the A) basic balance. B) liquidity balance. C) official settlements balance. D) balance of trade. ANSWER D
Wage inequality has been on the rise in virtually all high-income industrial economies since the 1970s. The causes are probably numerous, but the leading explanation for the greatest share of the increase in inequality is A) the growth of trade with developing countries. B) the growth of trade with other high income industrial countries. C) […]
There are debt relief programs currently available for highly indebted poor countries. Indicate whether the statement is true or false ANSWER TRUE
If the world terms of trade for a country are somewhere between the domestic cost ratio of H and that of 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. […]
As populations age, public spending tends to increase. Indicate whether the statement is true or false ANSWER TRUE
