The idea behind the traditional industrial policy of import substitution is:
A. build up home industries to compete with others in the world.
B. give certain industries a chance to enter a market and gain efficiencies that companies elsewhere in the world have already gained in that industry.
C. to protect infant industries until they can become price competitive in the world market.
D. All of these statements are true.
Answer: D
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In the globalized model, the eventual equivalency of domestic and world prices follows from the:
A. law of one price. B. law of demand. C. law of comparative advantage. D. law of supply.
Suppose the United States economy is represented by the following equations: Z = C + I + G C = 500 + .5YD T = 600 I = 300 YD = Y - T G = 2000 a. Given the above variables, calculate the equilibrium level of output. b. Now, assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output? How much does income change as a result of this event? What is the
multiplier for this economy? What will be an ideal response?
Use the following graph for a competitive market to answer the question below.
Assume the government imposes a $3 tax on buyers, which results in a shift of the demand curve from D1 to D2. The amount of the tax revenue paid by the buyer is
A. $300. B. $600. C. $2100. D. $900.
If the price of a good in the U.S. is $10, the exchange rate is 2 units of foreign currency per dollar, and the foreign price of the same good is 30 units of foreign currency, then the real exchange rate is 2/3
a. True b. False Indicate whether the statement is true or false