Even-handed enforcement of contracts fuels economic prosperity because it
A) increases market uncertainty and the probability of contract violations.
B) promotes gains from trade by keeping transaction costs low.
C) increases transaction costs.
D) permits individuals to invade or infringe on the property rights of others.
B) promotes gains from trade by keeping transaction costs low.
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A significant advantage to being a member of a trade bloc is
A) higher tariff collections from member countries. B) reduced or eliminated tariffs among member countries. C) reduced tariff rates only for the largest member countries. D) None of the above; there is no economic advantage to a trade bloc.
The appropriate "medicine" for correcting payments imbalances under a fixed exchange rate system is
a. inflation for deficit countries and recessions for surplus countries. b. no change for surplus countries, tax cuts for deficit countries. c. inflation for surplus countries and recessions for deficit countries. d. sales of gold for deficit countries and revaluations for surplus countries.
Diminishing returns means that
A) each additional unit of labor produces successively more real GDP. B) hiring more labor must lower the real wage rate. C) each extra unit of real GDP produced requires less labor. D) hiring more labor results in less real GDP. E) each additional unit of labor produces successively less real GDP.
The ________ rate represents the difference between the spot and forward price
A) profit B) swap C) spread D) risk