In the shortrun (specificfactors) model, foreign direct investment is expected to ________ the marginal product of labor and ________ wages in the receiving country.
a. decrease; decrease
b. increase; decrease
c. decrease; increase
d. increase; increase
Ans: d. increase; increase
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Trade within a country typically involves ________, while trade between countries normally involves ________.
A. real currencies; nominal currencies B. a single currency; different currencies C. nominal currencies; real currencies D. flexible exchange rates; fixed exchange rates
Explain how the Fed intervenes in the foreign exchange market and what the effects are of the Fed's actions
What will be an ideal response?
Under the gold standard, when a nation had a deficit in its balance of payments,
A) interest rates would rise which would reduce foreign investment. B) interest rates would fall which would increase foreign investment. C) gold would flow to foreign residents and the domestic money supply would decrease. D) gold would flow into the country leading to an increase in the domestic money supply.
Suppose a farmer is a price taker in soybeans with cost functions given by TC = .1q2 + 2q + 30 MC = .2q + 2 Suppose the farmer has to purchase a license for $50 per period in order to stay in business. In this case, its new total cost function is
a. still TC = .1q2 + 2 b. TC = .1q2 + .2q + 80 c. TC = .1q2 + 2q + 50 d. TC = 50