Initially, workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, which causes domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, the demand for labor in the shoe industry ________ and the demand for labor in the computer industry ________.
A. decreases; increases
B. increases; increases
C. increases; decreases
D. decreases; decreases
Answer: A
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A decrease in Swiss prices will cause
A) an increase in the demand for U.S. dollars and an increase in the exchange rate of Swiss francs per dollar. B) a decrease in the demand for U.S. dollars and a decrease in the exchange rate of Swiss francs per dollar. C) an increase in the supply of U.S. dollars and a decrease in the exchange rate of Swiss francs per dollar. D) a decrease in the supply of U.S. dollars and an increase in the exchange rate of Swiss francs per dollar.
The situation in the figure above creates a barrier to entry for a second firm because
i. a second firm that produced as many kilowatt-hours as the first firm would see the market price fall beneath its cost and would incur an economic loss. ii. a second firm that produced fewer kilowatt-hours than the first firm would have to charge a higher price and would not gain many customers. iii. the first firm's average total cost curve indicates it has been given a patent for the product. A) i only B) ii only C) iii only D) i and ii E) i and iii
Suppose that the U.S. Open ticket costs $100 and the British Open ticket costs £50 and the exchange rate is $1.43. How much does the British Open ticket cost for an American attending the British Open?
What will be an ideal response?
Empirical evidence shows that the nominal interest rate typically rises at the same time the inflation rate increases. What does this suggest?
A) The real rate of interest is zero. B) Increases in the current inflation rate lead borrowers and lenders to expect that inflation in the future will be higher than previously thought. C) Interest rate changes are the main component of the CPI. D) Interest rate changes are the main component of the GDP deflator.