Suppose that a country has a comparative advantage in agricultural products. When trade occurs, the nominal and real prices of the agricultural good will:
a. both fall.
b. both rise.
c. both remain constant.
d. The nominal price will fall and the real price will rise.
Ans: b. both rise.
You might also like to view...
Which of the following countries currently has the largest population?
a. India b. Indonesia c. Brazil d. China
La Tortilla is the only producer of tortillas in Santa Teresa. The firm produces 10,000 tortillas each day and has the capacity to increase production to 100,000 tortillas each day
La Tortilla has made a large profit for years, but no other firm has chosen to compete in the Santa Teresa tortilla market. La Tortilla has been able to deter entry because if other firms were to enter the market it would greatly step-up production and reduce price. A) La Tortilla's behavior is inconsistent with economic theory. B) La Tortilla has been successful because of its credible threat. C) La Tortilla behaves like a Stackelberg firm. D) La Tortilla must have other barriers to entry to protect its monopoly power.
Consider the statement, "The number of beers consumed the night before a test affects the grade." In this statement
A) beer is the dependent variable and test grade is the independent variable. B) beer is the independent variable and test grade is the dependent variable. C) both beer and grade are dependent variables. D) both beer and grade are independent variables.
All points on the long run Phillips curve that are sustainable in the long run due to economy's self correcting mechanism correspond to
a. the mature rate of unemployment. b. the natural rate of unemployment. c. the seasonal rate of unemployment. d. the cyclical rate of unemployment.