What effect does a recession have on a country’s international trade?
What will be an ideal response?
Since the flow of merchandise imports is directly related to changes in national income, a recession usually produces a decrease in the volume of imported goods and services. If the recession affects a number of major trading nations during the same period, the total volume of world trade will also decline.
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Consider the market for smart phones. Which of the following shifts the demand curve rightward?
A) a decrease in the price of smart phones B) an increase in the price of smart phones C) an increase in the price of land-line phone service, a substitute for smart phones D) an increase in the supply of smart phones E) a decrease in the number of smart phone buyers
Other things remaining the same, the
A) larger the value of U.S. imports, the smaller is the quantity of foreign currency demanded. B) larger the value of U.S. imports, the greater is the quantity of U.S. dollars supplied to the foreign exchange market. C) lower the exchange rate, the cheaper are foreign-produced goods and services. D) higher the exchange rate, the greater is the expected profit from selling dollars.
What is meant by the "law of one price"?
A) A law was passed in 1913 that made it illegal to sell the same good or service to different people for different prices. B) This is a section of the Sherman Act that forced trusts (for example, the Standard Oil Company) to charge the same price for the same good or service in different states. C) Foreign companies should not be allowed to sell a product in the United States for prices different from prices these companies charge in other countries. D) Identical products should sell for the same price everywhere.
The interest rate that the Federal Reserve pays banks on the reserves they hold is called the
a. open-market rate. b. discount rate. c. preference rate. d. None of the above are correct.