Consider the market for meekers in the imaginary economy of Meekertown. In the absence of international trade, the domestic price of a meeker is $30. Suppose that the world price for a meeker is $40. Assume that Meekertown is too small to influence the world price for meekers once they enter the international market.
1.If Meekertown allows free trade, then it will ___________ meekers.
2. Given current economic conditions in Meekertown, complete the following table by indicating whether each of the statements is true or false.
3. Meekertownian consumers were worse off without free trade than they are with it.
4. Meekertownian producers were better off without free trade than they are with it.
5. When a country is too small to affect the world price, allowing free trade will always decrease total surplus in that country, regardless of whether it imports or exports as a result of international trade.
True
False
Answer: 1. export
2. True
3. True
4. True
5. True
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In 1929, the CPI equaled 0.171 and in 1930, the CPI equaled 0.167. These data provide evidence of a period of:
A. trade deficit. B. expansion. C. deflation. D. inflation.
If a person withdraws $500 from his/her checking account and holds it as currency, then M1 will ________ and M2 will ________
A) not change; increase B) not change; not change C) decrease; increase D) increase; decrease E) decrease: decrease
Government outlays include all of the following EXCEPT
A) dividend payments. B) spending on the military. C) electricity for the Capital Building. D) letterhead stationery.
If the price of inputs falls and the level of consumer indebtedness rises:
a. Price index falls, and real GDP falls. b. Price index falls, and the change in real GDP is uncertain. c. The change in price index is uncertain, and real GDP rises. d. The change in price index is uncertain, and real GDP falls. e. Neither the price index nor real GDP changes.