Exhibit 3-3 Demand curves
Which of the graphs in Exhibit 3-3 depicts the effect of a decrease in the price of domestic cars on the demand for foreign cars?
A. Graph A.
B. Graph B.
C. Graph C.
D. Graph D.
Answer: C
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A Consumer Price Index adjustment overcompensates for inflation because it ignores
A) the income effect when relative prices change. B) the substitution effect when relative prices change. C) that some goods are inferior. D) that the substitution effect may offset the income effect.
The U.S. balance of payments status may improve when
A) the inflation rate increases in the United States relative to other countries. B) political instability in other countries increases. C) the world demand for U.S. products falls. D) the American government increases its spending on foreign aid.
Recently, Chrysler bonds with a face value of $100 closed at $103. The coupon rate was 12.75 percent. The current yield on these bonds was
A. 103 percent. B. 3 percent. C. 12.75 percent. D. less than 12.75 percent.
Which of the following is not a reason to restrict trade?
A. Concerns about dumping. B. Concern about high prices for consumers. C. Protection of infant industries. D. Preservation of national security.