The law of one price states that a product should cost the same everywhere if the prices in different countries are:
A. unaffected by exchange rate overshooting
B. converted into the same currency using market exchange rates
C. recalculated as the ratio of the local price to the local wage rate in each country
D. measured in local currency units in each country
Answer: B
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The Southern economy ________________ from the damages of the Civil War.
A. quickly recovered B. experienced no lingering effects C. suffered decades of economic transition
The Reagan administration's experiment with supply-side economics produced a historic period of economic expansion that was accompanied by:
a. falling real interest rates. b. high unemployment rates. c. a dramatic increase in the federal government's budget deficit. d. a reduction in the U.S. trade deficit. e. All of the above.
Appreciation of the dollar means that now it takes more dollars to buy one unit of foreign currency
a. True b. False Indicate whether the statement is true or false
What term is used to describe situations where countries specialize in and trade different varieties of the same type of product?
a. comparative advantage b. the Heckscher-Ohlin model c. intra-industry trade d. increasing returns to scale