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
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
Most economists attribute the growing income inequality in the United States to A) trade. B) macroeconomic policies. C) technological change. D) changing values. E) taxes. ANSWER C
An example of odious debt would be debts on the part of a nation that were incurred by a dictator for the well being of his family. Indicate whether the statement is true or false ANSWER TRUE
Which of the following is included in the capital account in the BOP? A) US-owned assets abroad B) US-owned assets in the US C) Unilateral transfers D) All are included in the capital account. ANSWER A
In the Ricardian model, if a country’s trade is restricted, this will cause all EXCEPT which? A) limited specialization and the division of labor B) reduced volume of trade and reduced gains from trade C) nations to produce inside their production possibilities curves D) a country to produce some of the product of its comparative […]
The world of flexible exchange rates and perfect capital mobility is often called the A) Keynesian model. B) Mundell-Fleming model. C) Monetarist model. D) Melvin model. ANSWER B
The best economic case one can make for an active industrial policy involves A) the national security argument. B) the technological spillover argument. C) the environment preservation argument. D) the high value added argument. E) raising the national income. ANSWER E
Explain the Law of One Price. Give an example. What will be an ideal response? ANSWER The law of one price states that in competitive markets free of transportation costs and trade barriers, identical goods sold in different countries must sell for the same price when expressed in terms of the same currency. = […]
It is important to compare debt levels of low- and middle-income countries to exports because countries must earn foreign exchange in order to service their debts. Indicate whether the statement is true or false ANSWER TRUE