Lessons about the nature of economic processes will likely emerge from the analysis of transitional economies
a. True
b. False
A
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One reason Zimbabwe suffered from hyperinflation is that the government had decided to pay for all of its expenses by
A) selling Treasury bonds to foreign governments. B) selling its government-run oil company to a private company, which then defaulted on its payment. C) raising interest rates to attract foreign direct investment, then nationalizing the foreign-owned facilities. D) printing more and more money.
In the Heckscher-Ohlin model, when two countries begin to trade with each other
A) the relative prices of traded goods in the two countries converge. B) relative factor prices in the two countries diverge. C) benefits from trade are evenly distributed between the two countries. D) all factors in both countries will gain from trade. E) all factors in one country will gain, but there may be no gains in the other country.
Someone in Germany has just ordered a U.S. car to be exported to Germany. In the U.S. balance of payments, this purchase is a(n)
A) accounting identity. B) special draw. C) surplus item. D) deficit item.
Assume that a college student purchases only Ramen noodles and textbooks. If Ramen noodles are an inferior good and textbooks are a normal good, then the substitution effect associated with a decrease in the price of a textbook, by itself, will result in
a. a decrease in the consumption of textbooks and a decrease in the consumption of Ramen noodles. b. a decrease in the consumption of textbooks and an increase in the consumption of Ramen noodles. c. an increase in the consumption of textbooks and an increase in the consumption of Ramen noodles. d. an increase in the consumption of textbooks and a decrease in the consumption of Ramen noodles.