Which of the following happens when a nation's net gains from trade are positive?
a. Supporting industries of the traded good are created
b. Supporting industries of the traded good earn lower profits.
c. All workers in the trading nation earn lower wages.
d. The total surplus enjoyed by the trading nation decreases
a
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Information asymmetry is present when:
A. one person knows more than another. B. there is risk. C. when both parties are lacking the same information. D. All of these statements are true.
Ricardian equivalence will fail to hold if:
A. people increase their spending when they receive a tax rebate check. B. people save, and do not increase their spending when they receive a tax rebate check. C. intended expansionary effects of tax policy fail to occur. D. All of these.
Tommy's Tires operates in a perfectly competitive market. If the market price equals $50 per tire and ATC = $60 per tire at the profit-maximizing level of output, then in the long run
a. more firms will enter the market b. the market supply curve will shift to the right c. the equilibrium price per tire will fall d. average total costs will rise e. the market supply curve will shift to the left
If we assume that the income elasticity of demand for food has been around 0.2 and that agricultural producers have become increasingly more productive, we can conclude that
A) prices of food have increased. B) supply increases have been less than demand decreases. C) as consumers' real incomes have been increasing over the years, they have been spending absolutely less on food. D) prices of food have been stable. E) none of the above