An increase in income in an open economy nation will cause a change in consumer spending on home production, and a(n):
a. increase in taxes.
b. decrease in savings.
c. increase in foreign production.
d. increase in imports if MPCF (marginal propensity to consume foreign goods) is greater than zero.
Answer: d. increase in imports if MPCF (marginal propensity to consume foreign goods) is greater than zero.
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Perfectly competitive firms will sometimes operate even though they incur an economic loss in the short run
Indicate whether the statement is true or false
Which of the following creates an obstacle to pursuing freer international trade?
a. Consumers do not recognize their potential gains b. Losses are widespread c. Domestic producers do not recognize their potential losses d. Government has plenty of political will and support to remove trade barriers e. Consumers can easily organize to demand free trade
Given the evidence presented in the Applied Perspective on China's population policy, it appears that by decreasing the rate of population growth, China
a. is likely to experience slower economic growth in the future b. has been able to increase the size of its agricultural sector relative to the industrialsector c. has become one of the major grain exporters in the world d. will lag behind India in population in the coming years e. has been able to shift more resources into capital accumulation to promote future economic growth
Inefficiency occurs when an economy is operating outside its production possibilities curve.
a. true b. false