In the Heckscher-Ohlin model, when two countries begin to trade with each other
A) the relative prices of traded goods in the two countries converge.
B) relative factor prices in the two countries diverge.
C) benefits from trade are evenly distributed between the two countries.
D) all factors in both countries will gain from trade.
E) all factors in one country will gain, but there may be no gains in the other country.
A
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Because of the automatic stabilizers, a decline in the level of economic activity will cause:
a. a reduction in tax revenues collected. b. an increase in government expenditures. c. a greater budget deficit. d. all of these.
Open-market purchases by the Fed
a. make the price level and value of money fall. b. make the price level rise, and make the value of money fall. c. make the price level and make the value of money rise. d. make the price level fall, and make the value of money rise.
If demand is perfectly inelastic, the price elasticity of demand is equal to:
A. 1. B. 0. C. infinity. D. a negative number between 0 and infinity.
The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music) the
A) opportunity cost of production is less in Japan. B) absolute cost of production is less in the United States. C) absolute cost of production is less in Japan. D) opportunity cost of production is less in the United States.