When the relative prices of U.S.-manufactured goods go up, the result is
A. a decrease in exports.
B. an increase in exports.
C. a decrease in imports.
D. no net change in imports or exports.
Answer: A
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In a small economy in 2016, aggregate expenditure was $850 million while GDP that year was $800 million. Which of the following can explain the difference between aggregate expenditure and GDP that year?
A) Aggregate expenditure is always less than GDP in developing countries. B) Aggregate expenditure is always less than GDP in developed countries. C) Firm investment in inventories was less than anticipated in 2016. D) Firm investment in inventories was greater than anticipated in 2016.
Darryl graduated with honors from college. However, he obtained his outstanding grades by cheating on every final exam with help from his best friend; Darryl actually has the talent of a C student. Nevertheless, he gets a job with a top accounting firm in Boston. The fact that he is hired illustrates a failure of
a. comparable worth b. signaling and screening c. marginal productivity d. supply and demand e. specialization
Assuming the economy in the graph shown is currently at equilibrium A, we can conclude:
A. there must be unemployment of resources. B. the economy is in a recession. C. the economy is producing less than its potential level of output. D. All of these are true.
Exhibit 17-2 Aggregate demand and aggregate supply curves
As shown in Exhibit 17-2, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD1 to AD2 will cause the economy to move:
A. directly from E1 to E3 and then remain at E3. B. directly from E1 to E2 and then remain at E2. C. from E1 to E2 initially and then eventually move back to E1. D. from E1 to E2 initially and then eventually move to E3.