If the price of a good in a closed economy is lower than the world price, then with an open economy this country will be a ________ of that good.
A. price taker
B. net importer
C. net exporter
D. price setter
Answer: C
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In the above figure, what are the long-run equilibrium price level and real GDP?
A) 130 and $11.5 trillion B) 120 and $11.5 trillion C) 120 and $12 trillion D) 130 and $12 trillion
Suppose the Fed had tried to keep the exchange rate at its 2001 level. In that case the Fed would have ________ dollars and its foreign reserves would have ________
A) bought; decreased B) sold; increased C) sold; decreased D) bought; increased E) None of the above is correct because the Fed cannot affect the exchange rate.
What is meant by the term "rational ignorance"?
A) It refers to the fact that policymakers and their constituents have different ideas of what it means to behave rationally and each party deliberately ignores the other's view. B) It refers to the absence of a negative incentive, such as levying a fine for not voting, which results in low voter turnout. C) It refers to a situation where one policymaker deliberately approves legislation he does not support in exchange for a future favorable vote for his own cause. D) It means the lack of an economic incentive for voters to become informed about a pending vote.
The most unequal distribution of income in the United States is in Washington, D.C
Indicate whether the statement is true or false