Suppose that producers of bottled water expect that the price of bottled water is going to drop next week. This would cause
A. an increase in the supply of bottled water today.
B. a decrease in the supply of bottled water oday.
C. an increase in the demand for bottled water today.
D. the selling price of bottled water to rise today.
Answer: A
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Between two countries, comparative advantage is found by comparing the:
a. relative costs of production in each country. b. absolute costs of production in each country after accounting for inflation. c. labor hours required to produce a bundle of products in each country. d. level of interest rates in each country. e. shipping and transportation costs of each country.
One advantage of a tariff over a quota, from the perspective of the nation imposing it, is that a tariff
a. decreases the domestic price b. increases the foreign price c. increases the quantity of imports d. decreases the quality of imports e. raises tax revenue
In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to
a. raise revenue from the wealthy. b. prevent wealthy people from buying luxuries. c. force producers of luxury goods to reduce employment. d. limit exports of luxury goods to other countries.
Under the gold standard, a nation with a balance of payments deficit would experience a gold:
A. inflow and an increase in its money supply. B. inflow and a reduction in its money supply. C. outflow and an increase in its money supply. D. outflow and a reduction in its money supply.