The idea behind reciprocity between two trading countries is that they
a. share the gains from trade equally
b. eliminate quotas against each other
c. eliminate tariffs against each other
d. use the same set of trading practices with respect to each other
e. agree to retaliate against other trading countries
D
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If a country choose to dollarize, it has relinquished its
A) monetary policy autonomy. B) pain from realignments C) ability to conduct fiscal transactions. D) ability to borrow internationally.
Suppose you found $10,000 hidden under a rock and deposited it in a demand deposit account at your bank. If the reserve requirement was 20 percent, your deposit would initially add ____ to total demand deposits and over time increase the money supply by a maximum of ____
a. $2,000; $4,000 b. $2,000; $40,000 c. $10,000; $40,000 d. $10,000; $50,000
Suppose that Bill wants to dine at a fancy restaurant, but the only available table is in the smoking section. Bill dislikes the smell of cigarette smoke. He notices that only one person, Peter, is smoking in the smoking section. Bill values the absence of smoke at $15 . Peter values the ability to smoke in the restaurant at $10 . In order for Bill to pay Peter not to smoke, he will need to tip
the waiter $10 to facilitate the transaction. Which of the following represents an efficient solution? a. Peter continues to smoke because the cost to Bill to pay him not to smoke is between $20 and $25, which exceeds the benefit to him of no smoking ($15). b. Bill offers Peter between $10 and $15 not to smoke, and he pays the waiter $10 . Peter accepts, and both parties are better off. c. Bill offers Peter between $10 and $15 not to smoke, and he pays the waiter $10 . Peter declines because he has a right to smoke in the smoking section. d. Bill offers Peter $5 not to smoke, and he pays the waiter $10 . Peter accepts, and both parties are better off.
The smaller is the absolute price elasticity of demand, the
A. larger is the responsiveness to a price change. B. larger is the income of the buyer. C. higher is the change in demand to an income change. D. smaller is the responsiveness of quantity demanded to the price change.