Knowledge workers are becoming more common relative to production workers
Indicate whether the statement is true or false
True
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When a temporary beneficial supply shock hits a small open economy, it causes the current account to ________ and investment to ________
A) fall; fall B) rise; remain unchanged C) fall; remain unchanged D) rise; fall
Answers will vary but should include the idea of exposure to risk. Even with a marked comparative advantage over other countries, a country that specialized in just one product would be exposed to a great deal of risk. For example, if a country specialized only in soybean production, but an infestation or weather event destroyed the crop, then the country would have no other product to bring to market, and its economy would be devastated.
What will be an ideal response?
Assume the U.S. government wants to hold the value of the dollar at $1.00 U.S. equals 120 Japanese yen, but it finds that the value of yen is appreciating against the U.S. dollar. What would be an appropriate policy to reverse this trend?
A) Buy more Japanese goods. B) Buy U.S. dollars. C) Sell U.S. dollars. D) Encourage U.S. investments abroad.
If one person's enjoyment of a good is reduced when another person consumes the good, then the good exhibits
A. an externality. B. exclusivity. C. rivalry. D. a moral loss.