Figure 34-7
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In Figure 34-7, CF has the same slope as BG. AB and CD are the production possibilities of Pestoland and Pastaland, respectively. If both countries are given the opportunity to trade at prices indicated by CF,
A. both will refuse trade.
B. both will agree to trade.
C. Pestoland will wish to trade, but Pastaland will not.
D. Pastaland will wish to trade, but Pestoland will not.
Answer: B
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a. U.S. goods more expensive relative to foreign goods and reduces the quantity of dollars supplied. b. U.S. goods more expensive relative to foreign goods and reduces the quantity of dollars demanded. c. foreign goods more expensive relative to U.S. goods and reduces the quantity of dollars supplied. d. foreign goods more expensive relative to U.S. goods and reduces the quantity of dollars demanded.
A temporary adverse supply shock, such as a drought _____
Fill in the blank(s) with the appropriate word(s).
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A. sponge analogy. B. squeegee analogy. C. pushing-on-a-string analogy. D. hose analogy.
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