The terms of trade between any two countries for two goods cannot be between their respective opportunity costs if there are to be any gains in trade.
Answer the following statement true (T) or false (F)
False
The terms of trade are based on opportunity cost being a measure of how much of one good must be given up to get a fixed amount of another good; the terms of trade should be bound between domestic and foreign opportunity costs. The domestic country would not buy abroad if it costs less to produce domestically, nor would it sell abroad if it could receive more income from selling domestically.
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The nominal exchange rate:
A. expresses the value of goods in one country in terms of the same goods in another country. B. is the stated rate at which one country's currency can be traded for another country's goods and services. C. is the stated rate at which one country's currency can be traded for another country's currency. D. expresses the value of goods in one country in terms of another country's currency.
Monetary policy affects the economy with a long lag, in part because
a. proposals to change monetary policy must go through both the House and Senate before being sent to the president. b. monetary policy works through changes in interest rates, and the Fed does not have the ability to change interest rates quickly. c. changes in interest rates primarily influence consumption spending, and households make consumption plans far in advance. d. changes in interest rates primarily influence investment spending, and firms make investment plans far in advance.
A resource the United States lacked in the 20th century and had to import was:
A. land. B. labor. C. minerals. D. technological creativity.
A new law applied to a competitive market that requires laid off workers be paid a large severance payment will
A) not generate a deadweight loss. B) increase total welfare. C) increase consumer surplus in the market. D) decrease consumer surplus in the market.