According to the Stolper-Samuelson theorem, an increase in the price of a country's imports will
A. have no impact on the returns to factors of production within the country.
B. raise the returns to the factor of production used intensively in the import-competing industry.
C. reduce the returns to the factor of production used relatively intensively in the import-competing industry.
D. raise the returns to all factors of production within the country.
Answer: B
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If the inflation rate in 2013 was 2.5 percent, and because of that people expect the inflation rate in 2014 will also be 2.5%, these people are said to have
A) rational expectations. B) expectations of stagflation. C) adaptive expectations. D) expectations of supply shocks.
Suppose Brad Pitt and Angelina Jolie wear matching platinum jewelry in their new movie. After the movie is released, suppose that consumers increase their demand for the jewelry and at the same time manufacturers increase the supply of the jewelry. As a result
A) the equilibrium quantity will increase, and there is an indeterminate change in the equilibrium price. B) the equilibrium quantity and price are both indeterminate. C) the equilibrium quantity will decrease, and the equilibrium price will increase. D) the equilibrium price and quantity will both decrease.
Let's be careful about defining our terms properly. Aggregate supply is the total value of
a. goods produced in the manufacturing sector that they are willing and able to supply at varying price levels b. goods and services that firms in the economy are willing and able to supply at varying price levels c. services that suppliers are willing and able to supply at varying price levels d. goods and services less the amount exported that firms are willing and able to supply at varying price levels e. goods and services including imports that firms are willing and able to supply at varying price levels
According to the Keynesian view, if policy makers thought the economy was about to fall into a recession, which of the following would be most appropriate?
a. a change in government spending and taxation that will lead to a budget surplus b. a planned increase in the budget deficit c. reducing government expenditures d. balancing the budget