Trade diversion is one reason that some economists:
a. believe we should not even other to promote free trade.
b. recommend we change our focus from regional trade agreements to the WTO, a multilateral trade agreement.
c. recommend we reinstate some tariffs that were actually beneficial to all nations.
d. think we should exclude low-wage nations from trade agreements.
Ans: b. recommend we change our focus from regional trade agreements to the WTO, a multilateral trade agreement.
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Assume that Country X and Country Y are trading partners and the exchange rates are fixed. If prices in Country Y rise, all of the following are expected to happen except
A. Country X will export more. B. Country Y will import more. C. net exports will rise for Country X. D. trade will boost the GDP of Country Y.
Perfectly competitive firms earn zero economic profit in the long run
a. True b. False Indicate whether the statement is true or false
Use the following graph to answer the next question.
In the graph, Dt is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money. The market is initially in equilibrium at a 6% rate of interest. If the supply of money increases as shown, then the asset demand for money will increase by
A. $75. B. $325. C. $125. D. $200.
Refer to the diagram. At output level Q 2 :
A. resources are overallocated to this product and productive efficiency is not realized.
B. resources are underallocated to this product and productive efficiency is not realized.
C. productive efficiency is achieved, but resources are underallocated to this product.
D. productive efficiency is achieved, but resources are overallocated to this product.