Carefully explain why there are gains from intraindustry trade
What will be an ideal response?
The increased size of markets leads to lower costs through the effect of scale economies. At the same time, competition among firms forces them to pass on their lower costs to consumers in the form of lower prices. The expansion of the market that occurs with trade leads eventually to an increase in the number of firms (although the distribution of firms between countries is unclear). Consumers benefit both from lower prices and from an increase in the variety of goods available to them.
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If the Fed sterilizes the purchase of foreign assets,
A) the monetary base is left unchanged. B) the monetary base rises by the amount of the purchase. C) the monetary base falls by the amount of the purchase. D) the monetary base may rise, fall, or remain unchanged depending on the reaction of domestic interest rates to the purchase.
One reason for the controversy surrounding the decision by the European Central Bank to buy Greek bonds was that:
A) it may increase moral hazard by encouraging other European governments to issue more debt than private investors were willing to buy B) it may increase adverse selection by encouraging other European governments to issue more debt than private investors were willing to buy C) it may result in higher risk premiums as private investors anticipate a default by Greece D) it may worsen the Greek recession by increasing Greek interest rates
Recall the Application about genetic testing and adverse selection to answer the following question(s).According to the Application, what is causing more and more consumers to get a complete genetic profile of themselves?
A. The cost of genetic testing is decreasing. B. The government is subsidizing genetic testing through Medicare. C. More employers are requiring genetic testing before workers are hired. D. More people want to know which famous person they are related to.
Suppose that California imposes a sales tax of 10 percent on all goods and services. A Californian named Ralph then goes into a home improvement store in the state capital of Sacramento and buys a leaf blower that is priced at $200. With the 10 percent sales tax, his total comes to $220. How much of the $220 paid by Ralph will be counted in the national income and product accounts as private income (employee compensation, rents, interest, proprietors' income, and corporate profits)?
A. $220 B. $200 C. $180 D. None of these are correct.