The difference between the value of the goods a country exports and the value of the goods a country imports is the country's
A) balance of trade. B) capital account balance.
C) current account balance. D) financial account balance.
A
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Suppose bicycles are produced by a competitive constant-cost industry, which is initially in a long-run equilibrium. For each of the following situations, design a supply-demand diagram that shows how market price and quantity will be affected in both the short run and the long run. In your diagrams, show the short-run supply, long-run supply, and demand curves, along with any shifts in these curves. Label the initial long-run equilibrium E0, the new short-run equilibrium E1, and the new long-run equilibrium E2.
(i) New health regulations require each bicycle firm to purchase an air purification system to reduce hazardous fumes in the workplace. Who pays for this increased cost in the short run? Who pays in the long run? (ii) The cost of titanium alloy rises, which adds $10 to the cost of manufacturing each bicycle frame. Who pays for this increased cost in the short run? Who pays in the long run? (iii) Bicycling declines in popularity as more and more people take up in-line skating. How are the profits of bicycle manufacturers affected in the short run? How are their profits affected in the long run?
Deflation is defined as a situation in which
A) the rate of inflation is below 2 percent. B) the average of all prices of goods and services in an economy is falling. C) the value of the dollar is rising relative to other currencies. D) the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter.
Certain kinds of tropical fruits are impossible to grow outdoors in the United States. Suppose, however, that in order to create jobs in Wyoming, the U.S. government offered extensive subsidies to firms to produce bananas. With the subsidies, firms could build greenhouses and offer the fruit at world prices
A) The United States now has a comparative advantage in bananas. B) The United States has a comparative advantage, but is not competitive. C) The United States is competitive, but does not have a comparative advantage. D) The United States has a comparative advantage and is competitive.
The U.S. work week has declined from 60 hours in 1890 to fewer than 40 hours today. The impact of the decline in working hours
A) increases U.S. GDP and increases the well-being of a typical working person in the U.S. B) increases U.S. GDP and decreases the well-being of a typical working person in the U.S. C) decreases U.S. GDP and increases the well-being of a typical working person in the U.S. D) decreases U.S. GDP and decreases the well-being of a typical working person in the U.S.