Within a country, the domestic price of a product will equal the world price if
a. trade restrictions are imposed on the product.
b. the country allows free trade.
c. the country chooses to import, but not export, the product.
d. the country chooses to export, but not import, the product.
b
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In the long run, the nominal exchange rate
A) is a monetary phenomenon, determined by the quantities of money in two countries. B) is not related to the real exchange rate, since the real exchange rate is the true value of currencies. C) will not change if prices in one country change, since prices are nominal variables. D) is fixed by world central banks, as indicated by the fixed exchange rate system.
Underwriting spreads on equity issues are much __________ than on debt issues because stock prices are so __________ relative to bond prices
A) smaller; steady B) smaller; volatile C) larger; steady D) larger; volatile
An import quota is a
a. tax on imports b. legal limit on the amount of a specific good that can be imported into a particular country c. tax on import quantities above the legal limit d. way to increase tariff revenues e. legal incentive for members of GATT to increase their exports of a particular good
Elasticity is a measure of:
a. the slope of a linear demand curve. b. the slope of a supply curve. c. relative responsiveness. d. economic welfare. e. consumer tastes.