Jane has just sent a gift that was made in the U.S. to her relatives in Italy. As far as the balance of payments is concerned this gift will
A) have no influence on the balance of payments since it was made in the U.S.
B) be part of the capital account since the gift is a physical item.
C) be considered an export since it has left the U.S.
D) be part of the current account as a unilateral transfer.
Answer: D
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Rent seeking is one reason why countries choose to
A) restrict trade. B) export and import the same goods. C) work for freer trade. D) follow the theory of comparative advantage.
In 1979, under the ERM, the member countries were pegged to the ECU, with a ______ band of fluctuation allowed.
A) 2.5% B) 2.25% C) 1% D) 10%
The demand for good X has been estimated to be ln Qxd = 100 ? 2.5 ln PX + 4 ln PY + ln M. The own price elasticity of good X is:
A. ?2.5. B. 4.0 percent. C. 4.0. D. ?2.5 percent.
The above figure illustrates the case of a monopsony in the labor market. If the current wage paid is W1 and new wage legislation is passed that increases the minimum wage in this market to W2, the firm will
A) hire less labor at the higher wage and, according to the law of demand, moving from point D to B. B) hire the same amount of labor as before the law was passed because it cannot adjust to wage changes. C) hire more labor, moving from point C to B. D) pay a higher wage, moving from point C to A.