To test the gravity equation of trade, a regression model was calculated for two nations, the United States and Canada, testing the correlation among:
a. regional trade, size of GDP, and distance for states and provinces.
b. intra-industry trade, size of GDP, and size of states and provinces.
c. bilateral trade and ratio of GDP for states and provinces.
d. bilateral trade, size of GDP, and distance for states and provinces.
Ans: d. bilateral trade, size of GDP, and distance for states and provinces.
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Peter's Pencils is a perfectly competitive company producing pencils. Suppose Peter is producing 1,000 pencils an hour. If the total cost of 1,000 pencils is $500, the market price per pencil is $2, and the marginal cost is $2, then Peter
A) makes an economic profit because marginal revenue is equal to marginal cost at this output level. B) should decrease his output to increase his profit. C) is maximizing his profit and is making an economic profit. D) should increase his output to increase his profit. E) is not maximizing his profit but is making zero economic profit anyway.
The above figure shows the Lorenz curves for four different countries. In which country is income most equally distributed?
A) country A B) country B C) country C D) country D
One reason the Fed tolerates ongoing inflation is because it
a. believes that the CPI understates the actual inflation rate b. believes that the CPI overstates the actual inflation rate c. accepts the idea that a zero inflation rate would make labor markets work more smoothly d. wants to focus more on price stability than on full employment e. is uncertain about the long-run stability of the Phillips curve
Recall the Application about using value added to measure the size of Walmart to answer the following question(s). When measuring the true contribution of Walmart to the U.S. economy, we must use the value of Walmart's total sales.
Answer the following statement true (T) or false (F)