For the United States, suppose the value of exported goods is greater than the value of imported goods. This implies that
A) the domestic currency will depreciate.
B) the dollar price of foreign currency will increase.
C) the country is running a deficit in its balance of trade.
D) the country is running a surplus in its balance of trade.
Answer: D
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To eliminate losses in a perfectly competitive market, firms exit the industry. This exit results in
A) an increase in market supply. B) a decrease in market supply. C) an increase in market demand. D) a decrease in market demand. E) a decrease in both the market supply and the market demand.
The Laspeyres price index tends to ________ the ideal cost-of-living index
A) be higher than B) be lower than C) be equal to D) zero faster than
Why do free trade proponents applaud successful trade deflection?
A) It circumvents trade restrictions within regional trade blocs. B) It increases trade restrictions within regional trade blocs. C) It promotes more rules of origin laws. D) It decreases incentives for trade diversion.
When the U.S. exchange rate rises, the trade deficit will:
A. usually fall. B. remain unaffected. C. be balanced by an increase in net exports. D. usually rise, too.