Which of the following shows a benefit gained by the United States through the North American Free Trade Agreement?
a. U.S. jobs were lost to lower production costs in Mexico.
b. Consumer prices in the United States were lower.
c. U.S. manufacturers cut wages to stay competitive.
d. The Mexican economy grew to a size similar to Canada’s.
b. Consumer prices in the United States were lower.
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Which statement most adequately describes the productivity of trade relative to the productivity of agriculture and manufacturing?
A) Trade is essential in an economy once agriculture and manufacturing have developed, even though it is not productive. B) Trade is less productive than agriculture or manufacturing. C) The word productive must be applied to agriculture or manufacturing in the same way it is applied to trade. D) Trade is productive only insofar as it distributes newly produced agricultural or manufactured goods. E) Trade is rarely productive because it almost never increases the quantity of goods in the economy.
Why is it important to distinguish nominal GDP from real GDP?
What happens to a monopolistically competitive firm that begins to charge an excessive price for its product?
a. The firm will go out of business. b. Consumers will substitute a rival's product. c. Consumers will boycott the product. d. The government will regulate the price.
Which of the following statements about economic models is TRUE?
A. The predictive power of models is not as important as they serve the preferences of economists. B. Every economic model is based on a set of assumptions. C. Economic models are designed so that every detail of the real world can be analyzed. D. Economic models are not empirically testable.