If you feel you are better off because you receive a 5 percent raise even when the price level also increases by 5 percent, then you are a victim of the
A. money illusion.
B. money income effect.
C. purchasing power effect.
D. real income effect.
Answer: A
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All of the following are barriers to international investment EXCEPT
A) adverse selection. B) incomplete information. C) moral hazard. D) symmetric information.
In the short run, the incidence of a sales tax is
a. wholly absorbed by the producer. b. shared between the consumer and the producer. c. deferred until the market is able to re-establish an equilibrium price. d. wholly absorbed by the consumer.
Roger and Brian have a discussion about cost minimization in firms during a recession. Roger stresses that company can reduce its costs by paying workers lower wages during a recession
a. Brian disagrees and argues that a company cannot reduce wages as price levels and wages do not adjust easily in the short run. Who do you think is correct? Give reasons to support your answer.
Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that
a. Ireland has a comparative advantage relative to the United States in producing pineapples, and China has a comparative advantage relative to Ireland in producing beer. b. Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantage relative to Ireland in producing pineapples. c. Ireland has an absolute advantage relative to the United States in producing pineapples, and China has an absolute advantage relative to Ireland in producing beer. d. Ireland has an absolute advantage relative to China in producing beer, and the United States has an absolute advantage relative to Ireland in producing pineapples.