If all other factors are held constant, an increase in imports
A. can cause Gross Domestic Product (GDP) to increase or decrease, depending on whether the imports are purchased by consumers or by business firms.
B. causes Gross Domestic Product (GDP) to increase.
C. causes Gross Domestic Product (GDP) to decrease.
D. causes an increase in exports of the same size.
Answer: C
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Refer to the table above. France has absolute advantage in
A) grapes. B) textiles. C) both grapes and textiles. D) neither grapes nor textiles.
If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n)
A) decrease in the supply of ice cream and a leftward shift of the supply curve. B) decrease in the quantity of ice cream supplied and a movement up along the supply curve. C) increase in the supply of ice cream and a rightward shift of the supply curve. D) increase in the quantity of ice cream supplied and a movement down along the supply curve.
A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade):$20 per bottleDomestic production (free trade):500,000 bottlesDomestic production (after tariff):600,000 bottlesDomestic consumption (free trade):750,000 bottlesDomestic consumption (after tariff):650,000 bottles The consumption effect of the tariff on wine is worth about
A. $3.5 million. B. $2.75 million. C. $500,000. D. $250,000.