The foreign purchases effect suggests that a decrease in the American price level relative to those in other countries will _____ American exports and _____ American imports.
Fill in the blank(s) with the appropriate word(s).
increase; decrease
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A successful market economy requires
A) an equitable distribution of income and limits on immigration. B) generous unemployment benefits and paid medical leave for everyone in the labor force. C) a government-controlled banking system and government price controls. D) well-defined property rights and an independent court system to adjudicate disputes based on the law.
If we consider the specificfactors model, the effect of an increase in exports on the real wages of workers:
a. is inconclusive because some goods' prices will be higher compared with the wage, and some will be lower. b. absolutely increases the buying power of the real wage. c. absolutely decreases the buying power of the real wage. d. will encourage foreign workers to emigrate to the United States.
Exhibit 2-10 Production possibilities curve data A B C D E Capital goods 0 1 2 3 4 Consumption goods25 23 19 13 0 Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must:
A. increase because the production possibility table shows only the maximum efficiency points. B. increase because of the law of increasing costs. C. decrease because of the law of increasing costs. D. decrease because of the finite nature of the resource base.
Wealth or net worth is equal to
A. assets plus liabilities. B. assets minus liabilities. C. income minus savings. D. consumption plus changes in net worth.