Formation of trade blocs can be considered beneficial because it
A. diverts world trade from low-cost producers to high-cost producers by encouraging too much trade within blocs.
B. causes international friction when certain countries are let in the bloc and others are left out.
C. encourages purchases from higher-cost producers.
D. encourages increased total trade by each member country.
Answer: D
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For individuals who are holding money or fixed dollar value assets, inflation has the effect of: a. improving their ability to purchase goods and services with those dollars. b. reducing their ability to purchase goods and services with those dollars. c. increasing the purchasing power of those dollars
d. demonstrating the interest rate effect.
When Iceland can generate a product using fewer labor hours and resources than the United States, an economist would say that Iceland had
a. a comparative advantage in production of the product. b. an absolute advantage in production of the product. c. a higher opportunity cost of producing the product. d. no incentive to import the product, regardless of the cost-price conditions for other products.
The principle of diminishing marginal utility says that
a. as more of a good or service is consumed, demand will decrease. b. as more of a good or service is consumed, the price will rise. c. the marginal utility of additional units consumed will increase. d. the marginal utility of additional units consumed will decline.
Sheamous loses his job and decides to sit on the beach rather than look for work during the next few months. Other things the same, the unemployment rate
a. increases, and the labor-force participation rate decreases. b. increases, and the labor-force participation rate is unaffected. c. is unaffected, and the labor-force participation rate decreases. d. and the labor-force participation rate are both unaffected.