What is immizerizing growth? Describe how it could happen and give at least one cited historical example. What will be an ideal response? ANSWER Immizerizing growth represents economic growth that results in a reduction in national welfare. When a large country expands its productive capacity of an exported good, the biased economic growth will […]
Given the information in the table above, if the world equilibrium price of widgets were 4 cloth, then A) both countries could benefit from trade with each other. B) neither country could benefit from trade with each other. C) each country will want to export the good in which it enjoys comparative advantage. D) neither […]
The United States has the largest percentage of foreigners in its overall population of any nation. Indicate whether the statement is true or false ANSWER FALSE
Debt service A) is rarely an issue for high-income countries. B) always makes a country worse off for having borrowed. C) is a problem when the amount of debt is small relative to the size of the economy. D) tends to benefit low- and middle-income countries at the expense of high-income countries. ANSWER A
What is the difference between the U.S. current account deficits of the 1980s and the 1990s? What will be an ideal response? ANSWER In the 1980s, the government budget balance (T-G) turned into a large negative, and foreign financing filled the gap. In the 1990s, the federal budget moved to a positive balance, but […]
The Brander-Spencer model identified market failure in certain industries due to A) unfair competition. B) wildcat destructive competition. C) environmental negative externalities associated with pollution. D) limited competition. E) lack of excess returns. ANSWER D
Given the information in the table above, Foreign’s opportunity cost of cloth is A) 0.5. B) 2.0. C) 6.0. D) 1.5. E) 3.0. ANSWER B
The infant industry argument calls for active government involvement A) only if the government forecasts are accurate. B) only if some market failure can be identified. C) only if the industry is not one already dominated by industrial countries. D) only if the industry has a high value added. E) only if the industry is […]
The Maastricht Treaty eliminated passport controls at borders with the European Union. Indicate whether the statement is true or false ANSWER FALSE
An imperfectly competitive firm has the following total cost curve: C = 100 + 4Q. What is marginal cost equal to when Q = 10? What will be an ideal response? ANSWER MC = 4 for any Q
