The trade-creation effect refers to:
a. a reduction in economic efficiency as a result of a preferential trade agreement.
b. a production shift to a higher-cost producer as a result of a preferential trade agreement.
c. the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home.
d. diversion of production from a country that has comparative advantage.
e. a production shift to a country that does not have comparative advantage.
c
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Of the following, which determines the price a price searcher will be able to charge?
A) The costs of capital B) The costs of labor C) Advertising costs D) Demand E) A, B, and C above.
The monetary policy strategy that directly ties down the price of internationally traded goods is
A) exchange-rate targeting. B) monetary targeting. C) inflation targeting. D) the implicit nominal anchor.
An example of "automatic stabilizers" is a rise in ________ causing the budget deficit to ________
A) real GDP, fall B) real GDP, rise C) government expenditures, fall D) government expenditures, rise E) the average tax rate, fall
Assume Company X deposits $100,000 in cash in commercial Bank A. If no excess reserves exist at the time this deposit is made and the reserve ratio is 20 percent, Bank A can increase the money supply by a maximum of:
A. $50,000. B. $180,000. C. $80,000. D. $500,000.