Which component of aggregate demand is most impacted by the foreign trade effect?
a. investment spending
b. consumption
c. net exports
d. government purchases
c. net exports
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A tariff has one distinct advantage over a quota. It increases tax revenues to the government.
Answer the following statement true (T) or false (F)
Which of the following is likely to have the smallest price elasticity of demand?
A) an automobile B) a new automobile C) a new Ford automobile D) a new Ford Mustang
In a market system, prices are used to coordinate economic activity.
Answer the following statement true (T) or false (F)
Suppose that the nominal value of GDP increased by approximately 2 percent during a given year, but real GDP decreased by 3 percent. Which of the following best explains these events?
a. The money supply decreased by approximately 5 percent. b. Prices fell by approximately 5 percent. c. Prices increased by approximately 5 percent. d. The real productive capacity of the economy increased by approximately 5 percent.