People sometimes worry that American trade with other countries will lead to large U.S. trade deficits and the movement of massive amounts of American capital out of the country. This worry is unfounded because countries cannot
A) increase savings at the same time that a trade deficit grows.
B) spend more than they earn.
C) invest more than they save.
D) have both current account and financial account deficits at the same time.
E) increase their trade with other countries without increasing their savings.
Answer: D) have both current account and financial account deficits at the same time.
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When a nation exports a good or service, employment in that industry
A) decreases. B) stays the same. C) increases. D) might change, but more information about what else the country exports is needed to determine if employment increases, decreases, or does not change. E) might change, but more information about what the country imports is needed to determine if employment increases, decreases, or does not change.
Refer to Figure 8.5. Suppose the firm increases output from 20 to 30 units. In the short run:
A. the firm will employ the same amounts of labor and capital as it would in the long run.
B. the firm will employ 5 more workers and 2 less units of capital than it would in the long run.
C. the firm will employ 5 fewer workers and 2 more units of capital than it would in the long run.
D. the firm will produce the output at a lower cost than it can in the long run.
During the early 1990s, many workers in military-related industries lost their jobs as the defense budget was reduced. Unemployment of this type is called
a. cyclical unemployment. b. the natural rate of unemployment. c. frictional unemployment. d. structural unemployment.
To increase their individual profits, members of a cartel have an incentive to
a. charge a higher price than the other members of the cartel. b. increase production above the level agreed upon. c. ignore the choices made by the other firms and act as a monopolist. d. charge the same price a monopolist would charge.