Which of the following is true?
a. In recent decades, the volume of U.S. international trade has been increasing as a share of the economy.
b. As transportation costs decline, the volume of international trade will also tend to decline.
c. Most international trade is between the governments of different nations.
d. If one party to an international exchange gains, the other party must lose a similar amount.
A
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If Saudi Arabia has invested substantially more money in foreign countries than foreigners have invested in Saudi Arabia, then we might expect Saudi:
A. GNP to exceed Saudi GDP. B. net foreign factor income to be negative. C. GDP to exceed Saudi GNP. D. net foreign factor income to be zero.
The real power in the FOMC lies with:
A. no single individual; all participants have an equal share of the power. B. the Chairman of the Board of Governors. C. the President of the New York Fed Bank. D. the System Open Market Manager.
The production possibilities curve in Figure 2.1 illustrates the notion of:
A. increased factory goods production. B. increased agricultural production. C. diminishing resources. D. opportunity cost.
The graphs above show the production possibilities curves for the U.S. and Canada, which both produce cars and wheat. Determine comparative advantage for each country, and then draw the CPC for each country, assuming that the world price of cars is 1.5 wheat. (Assume that wheat is measured in thousands of bushels.) How would the gains from trade change if the price of cars rose to 1.75 wheat?
What will be an ideal response?