When individuals and businesses are permitted to trade freely over a larger market area
What will be an ideal response?
they will be able to produce a larger output and consume a more diverse bundle of goods
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Suppose a U.S. importer agrees to pay a Japanese firm 55,000 yen for a shipment of goods. If the agreement is made when the exchange rate is $1 = ¥100, what is the change in the dollar value of the goods if the exchange rate changes to $1 = ¥110, on the payment-due date?
a. -$50 b. $550,000 c. -$550,000 d. $50 e. -$55,000
Self correcting mechanism reveals that
a. real wages will increase if there is an increase in price. b. nominal wages will fall if there is inflationary gap. c. nominal wages will increase if there is recessionary gap. d. in the long run economy will be in equilibrium at potential GDP.
Inflation is
A. a rise in the price of every good and service. B. a rise of exactly a specified percentage in the price of every good or service. C. a rise in the average price level. D. a rise in average prices of at least 10 percent a year.
What role does a company like J.D. Power (which provides product satisfaction reviews) serve?
A) It provides a screening test. B) It provides a signal of quality. C) It reduces moral hazard. D) It reduces costs of giving surveys.