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
As populations age, public spending tends to increase. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
A reason why it is difficult for developing countries to maintain a cartel is that A) the elasticity of demand for a cartel’s output decreases over time. B) producers in the cartel have an economic incentive to cheat. C) economic profits discourage other producers from entering the industry. D) producers in the cartel have the […]
Date: September 10th, 2020
Even if some people are hurt by international trade, the HO model predicts that free international trade improves the standard of living for the country as a whole. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
Complete crowding out occurs when A) monetary policy has no effect on income. B) fiscal policy has no effect on income. C) monetary policy has no effect on interest rates. D) fiscal policy has no effect on interest rates. ANSWER B
Date: September 10th, 2020
