Adam Smith wrote that a person should never attempt to make at home what it will cost him more to make than to buy
a. True
b. False
Indicate whether the statement is true or false
True
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If an economy experiences deflation, the real interest rate
A) will be greater than the nominal interest rate. B) will be equal to the deflation rate, so long as the nominal interest rate is positive. C) will be negative when the nominal interest rate is positive. D) will be less than the nominal interest rate.
If relative PPP held, then the real exchange rate must be equal to one
Indicate whether the statement is true or false
Vertical contracts between manufacturers and retailers often aim to
a. Incentivize the retailers to undertake costly activities, which they otherwise may not realize the full benefits of on their own b. Reward the retailer for undertaking the risk inherent in introducing a new product c. Reimburse the retailer for the cost of managing an extended inventory d. All of the above
If the elasticity of demand for labor in the United States is unitary, immigration into the United States can be expected to:
A. increase the average U.S. wage rate. B. decrease the total amount of wage earnings that U.S. workers receive. C. increase the total amount of wage earnings that U.S. workers receive. D. leave the total amount of wage earnings that U.S. workers receive unchanged.