Everything else constant, the international trade effect indicates that aggregate expenditures in the domestic economy fall when:
a. domestic prices fall relative to foreign prices.
b. domestic interest rates fall relative to foreign interest rates.
c. domestic prices rise relative to foreign prices.
d. domestic purchasing power rises relative to foreign purchasing power.
e. domestic interest rates rise relative to foreign interest rates.
c
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If a country produces only two goods, it is possible to have a comparative advantage in the production of both those goods
Indicate whether the statement is true or false
A firm faces the following relationship between the real wage it pays and the effort exerted by its workers. The marginal product of labor for this firm is given by MPN = E (100 - N)/9
The firm will choose to pay a wage such that the effort level is A) 20. B) 24. C) 27. D) 29.
If the expected return on bonds increases, all else equal, the demand for bonds increases, the price of bonds ________, and the interest rate ________
A) increases; decreases B) increases; increases C) decreases; decreases D) decreases; increases
Assume that labor and capital are complements in production and that the wage declines. Which of the following statements best describes the adjustment in the use of labor?
A) Adjustments in labor use are not influenced by adjustments in capital use. B) The MRPL curve shifts downward in this case. C) More labor is used both because of the reduced wage and increased use of capital. D) Changes in labor use are indeterminate because the reduced wage and reduced use of capital have opposite influences on the use of labor.