When domestic prices rise,
A. people buy fewer imported goods.
B. exports rise.
C. exports fall.
D. business investment rises because interest rates fall.
Answer: C
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Once a country has lost its comparative advantage in producing a good, its income will be ________ and its economy will be ________ if it switches from producing the good to importing it
A) higher; less efficient B) lower; less efficient C) higher; more efficient D) lower; more efficient
Which one of the following statements is TRUE of the Consumer Price Index?
A) It does not take account of the price of imported goods and services. B) It does not take into account the price of used goods. C) It understates the true rate of inflation. D) It measures changes in prices of a fixed basket of goods.
On any given day, a salesman can earn $0 with a 30% probability, $100 with a 20% probability, or $300 with a 50% probability. His expected earnings equal
A) $0. B) $100. C) $150. D) $170.
An increase in the price level:
A. decreases the purchasing power of money, leading to higher interest rates, which decreases investment. B. increases the purchasing power of money, leading to lower interest rates, which increases investment. C. decreases the purchasing power of money, leading to lower interest rates, which increases investment. D. increases the purchasing power of money, leading to higher interest rates, which decreases investment.