What is a price floor and why must it be above the equilibrium price to be effective?
What will be an ideal response?
A price floor is a minimum price. It is only effective above the equilibrium price because the market will remain at equilibrium if a minimum price is set below the equilibrium price.
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Fair trade products consist of goods:
A) that are usually imported from the developing nations. B) the production of which involves child labor. C) that are available in all countries across the globe. D) that are exported only by the developed nations.
Devaluation of a country's currency is likely to
a. raise the prices of imported goods b. reduce the prices of exported goods c. shift resources into production of exported goods d. raise all prices e. all of the above
If saving is less than domestic investment, then
a. there is a trade deficit and Y > C + I + G. b. there is a trade deficit and Y < C + I + G. c. there is a trade surplus and Y > C + I + G. d. there is a trade surplus and Y < C + I + G.
Assume expectations of prices are correct but expectations of productivity adjust slowly. Use the PS/WS relations, graphically illustrate and explain the effects of a decrease in productivity growth on the natural rate of unemployment
What will be an ideal response?