What effect did the decrease in the value of the dollar have on the U.S. trade deficit in the period from 2006 to 2009?
A. It decreased the trade deficit as Americans bought more U.S. capital goods.
B. It decreased the trade deficit as foreigners were attracted to the increased value of U.S. products and Americans bought fewer imports.
C. It increased the trade deficit as U.S. investors bought more domestic financial assets.
D. It increased the trade deficit as Americans bought more imports and foreigners bought fewer U.S. products.
Answer: B
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If in the market for bananas the supply curve has shifted to the right, then
A) the supply of bananas has decreases. B) the quantity of bananas supplied has decreased. C) the quantity of bananas supplied has increased. D) the supply of bananas increased.
In order for the condition E$/HK$ = PUS/PHK to hold, what assumptions does the principle of purchasing power parity make?
A) Only that there are no transportation costs and restrictions on trade. B) Only that the markets are perfectly competitive, i.e., P = MC. C) The factors of production are identical between countries. D) No arbitrage exists. E) HK and the US are perfectly competitive and there are no transportation costs or restrictions on trade.
If a production process generates pollution, then a competitive market will
A) produce more of the good than is socially optimal. B) produce less of the good than is socially optimal. C) produce the socially optimal quantity of that good. D) produce zero output.
Suppose a local bookstore notices that a 2 percent increase in book prices leads to a 2 percent decrease in the number of books sold. Which of the following is true?
a. Demand for books is price elastic. b. The store's sales revenue did not change. c. Demand for books is price inelastic. d. Demand for books is perfectly inelastic. e. The bookstore could increase revenue by further lowering prices.