When individuals and businesses are permitted to trade freely over a larger market area,
a. wages will decline to the level of the poorest country in the region.
b. the monopoly power of business firms will increase.
c. they will be able to produce a larger output and consume a more diverse bundle of goods.
d. businesses will be able to earn higher profits, but the income levels of individuals will decline.
C
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A closed economy is characterized by
A) the absence of trade with other economies. B) the absence of use of money for transactions. C) no growth in population. D) a Cobb-Douglas production function.
One way the "lemons problem" in the used-car market can be mitigated is by
a. raising the price of used cars. b. hiring auto experts to sell used cars. c. requiring sellers to guarantee trouble-free cars. d. allowing owners to trade in their own cars when they purchase a used car.
Assume a U.S. investor buys a Mexican bond with a face value of MXP 1,000 and a 20 percent annual interest yield while the exchange rate is MXP 10 per dollar. What is the dollar return from the bond if the exchange rate at the end of the year is MXP 11 per dollar?
a. 9.1% b. 10.0% c. 18.2% d. 20.0% e. 32.0%
If Walmart buys $50 million worth of consumer goods from China and sells them in the U.S., and China uses the $50 million to purchase U.S. bonds, U.S. net exports and U.S. net capital outflow both fall
a. True b. False Indicate whether the statement is true or false