Identify the correct statement.
A. Freer trade in environmental services actually lowers environmental quality, especially in the developing countries.
B. There is sufficient evidence to prove that free trade simply promotes production and consumption of products that tend to cause large amounts of pollution.
C. It is not easy to find cases where government policies that limit or distort trade result in environmental damage.
D. Environmentalists often fear that free trade permits production to be shifted to countries that have lax environmental standards.
Answer: D
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Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C)
If the price of motorcycle side cars (a complement to motorcycles) decreases, and the wages of motorcycle workers increase, how will the equilibrium point change? A) The equilibrium point will move from C to A. B) The equilibrium point will move from C to B. C) The equilibrium will first move from C to A, then return to C. D) The equilibrium point will move from C to E.
If the Treasury prints currency to finance an expenditure, the impact on the money supply is similar to when the Treasury borrows from the
A) banking system when it is fully loaned-up. B) banking system when it has excess reserves. C) non-bank public. D) Federal Reserve.
The saying that "You cannot have your cake and eat it too" illustrates the economic concept of
A) a positive statement. B) a normative statement. C) physical capital. D) opportunity cost.
The actual money multiplier is smaller than the simple money multiplier because: a. the actual multiplier affects M2 rather than M1
b. cash withdrawals reduce the amount banks can lend out. c. the actual multiplier affects the amount of excess reserves each bank holds. d. the size of the simple multiplier depends on the volume of deposits unlike the actual multiplier. e. the actual multiplier uses a different measure of reserve requirements.