Trade diversion reduces worldwide efficiency, because:
a. production is diverted to the country with comparative advantage.
b. production is diverted away from the country with comparative advantage.
c. unnecessary trade restrictions are created in the economies.
d. consumption is diverted to the country having inadequate demand.
e. the cost of transhipment of the goods increases thus raising their prices in the world market.
b
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Which of the following will cause an increase in economic growth?
A) a reduction in the unemployment rate B) a reduction in labor force participation C) an increase in human capital D) a reduction in the stock of physical capital
Suppose a bank has $8 million in deposits and a reserve ratio of 20 percent. Its required reserves are
A) $40,000. B) $400,000. C) $1,600,000. D) $16,000,000.
Ronald Coase's analysis of externalities emphasizes the importance of:
a. command-and-control regulations. b. effluent taxes. c. property rights. d. international sovereignty.
To answer the next question use the information in the table below which illustrates the multiplier process resulting from an autonomous increase in investment by $5. Change in IncomeChange in ConsumptionChange in SavingsAssumed increase in investment$5.00 $1.25Second round $2.81 All other rounds 8.44 Totals 5.00The multiplier in this economy is
A. 2. B. 3. C. 4. D. 5.