Suppose a large country experiences economic growth which results in an increased willingness to trade. The country's terms of trade will ________ because the increase in demand for imports will cause the price of its exports to ________ relative to the price it has to pay for its imports.
A. worsen; fall
B. worsen; rise
C. improve; rise
D. improve; fall
Answer: A
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Millionaires do not face the problem of scarcity.
Answer the following statement true (T) or false (F)
According to the Ricardo-Barro effect
A) the government budget has no effect on the real interest rate. B) a government budget deficit crowds out private investment. C) financing government spending with taxes has a smaller effect on private investment than financing through government borrowing. D) None of the above answers are correct.
Assume that two individuals, A and B, are willing to trade products X and Y. Before a possible trade, A has the following marginal rates of substitution of X for Y (or of Y for X): MRSXYA = 0.80 (or equivalently, MRSYXA = 1.25)
Also, before a possible trade, B has these marginal rates of substitution of X for Y (or of Y for X): MRSXYB = 1.50 (or equivalently, MRSYXB = 0.67). Determine if trade can take place that would benefit either or both. If trade can benefit either or both, determine who will trade for what.
Comparative advantage is always a(n) ________ concept
A) absolute B) efficiency C) relative D) monetary