The law of one price works better if
A. the governments of the trading countries implement adequate trade barriers.
B. transportation costs for the product are close to zero.
C. there are few buyers and sellers.
D. there is incomplete information.
Answer: B
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A sum of $10,000 is deposited in a bank. Consider two situations: the bank offers an annual rate of interest of 10% and the bank offers an annual rate of interest of 15%. Compare the time value of money generated in both cases after:
a) one year. b) five years.
The debt-to-GDP ratio increases when the primary deficit ________ or when seigniorage ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
In contrast to American firms, Japanese firms frequently make lifetime employment commitments to their workers and agree not to lay them off when product demand is weak. Other things being equal, we would expect Japanese firms to:
A. face more elastic product demand curves than American firms. B. have relatively greater variable costs than American firms. C. discontinue production at higher product prices than would American firms. D. continue to produce in the short run at lower prices than would American firms.
A U.S. tariff on oil would reduce the domestic quantity of oil demanded.
Answer the following statement true (T) or false (F)