The foreign trade effect states that, ceteris paribus:
A. The quantity demanded of domestic goods falls when the domestic price level falls.
B. The quantity demanded of imported goods falls when the price of imported goods falls.
C. Foreign consumers have more incentive to buy American-made products when U.S. prices rise.
D. The quantity demanded of domestic goods rises when the domestic price level falls.
Ans: D. The quantity demanded of domestic goods rises when the domestic price level falls.
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Autonomous consumption is consumer spending which is based on income levels
Indicate whether the statement is true or false
A noncooperative equilibrium is one in which:
A. a dominant strategy exists for both players. B. each player ignores the actions of the other players. C. always results in a negative-negative outcome. D. the participants act independently, pursuing only their individual interests.
The Mincer earnings function is used to estimate
A. the age earnings profile. B. ability bias. C. the value of the marginal product of labor. D. the social return to schooling. E. the signaling effect.