Which of the following is FALSE about intraindustry trade?
A) Economies of scale allow firms to enjoy lower average costs.
B) It creates gains from trade.
C) It is due to comparative advantage.
D) It may involve heightened competition and lower prices for consumers.
E) It increases consumer choice.
C
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If the marginal social benefit of a good equals the marginal private benefit of the good, then the marginal external benefit of the good
A) is zero. B) equals the marginal social benefit. C) equals the marginal social cost. D) equals the marginal private cost.
In the Keynesian model, the difference between no intervention by the government during a recession and intervention using expansionary monetary or fiscal policy is that no intervention will return the economy to its equilibrium level of output
A) faster than intervention will and at a lower price level. B) slower than intervention will and at a higher price level. C) slower than intervention will and at a lower price level. D) faster than intervention will and at a higher price level.
In order to assess the relationship between the real exchange rate and total exports for any nation, one must construct a real effective exchange rate that measures:
a. a composite of each trading partner's real exchange rate change weighted by the share of trade. b. the exchange rate that would exist with no inflation and balanced trade. c. the average of all nominal exchange rates since we assume no inflation. d. nominal trade adjusted for inflation.
The amount of time it takes for fiscal policy to have an impact on the economy creates:
A. a direction lag. B. an implementation lag. C. an information lag. D. a formulation lag.