Implementing a regional free-trade agreement may have an effect in which, due to reduced tariffs, a nation begins to import a product from another member country that it had previously imported from outside the new trade region. This effect is called:
a. trade creation.
b. trade diversion.
c. reciprocal trade agreements.
d. the employment effect of FTAs.
Ans: b. trade diversion.
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Suppose bad weather in Florida unexpectedly results in a much smaller citrus crop than had been projected. This would tend to cause the labor supply curve for citrus pickers to
A) shift to the left, causing the labor demand curve to shift to the left. B) remain unchanged, and the wage rate would tend to increase. C) shift to the right, causing the labor demand curve to shift to the right. D) remain unchanged, and the wage rate would tend to decrease.
The slope of the supply curve of reserves can be attributed to the fact that:
A) quantity supplied of reserves decreases with the federal funds rate. B) the supply of reserves is arbitrarily set by the World Bank. C) the Fed fixes the supply of reserves. D) quantity supplied of reserves increases with the federal funds rate.
The accelerator principle relates the level of investment to changes in the level of national income
Indicate whether the statement is true or false
A monopolistically competitive market is one in which:
A. only one firm sells a product. B. all firms sell an identical product. C. many firms sell similar yet slightly different products. D. firms have no control over the price they charge for their product.