During the Great Depression, many industrial countries tried protecting domestic jobs by raising tariffs. Economic theory would suggest that the result would be
A) success for only the countries that raised tariffs first.
B) success for firms that had a comparative advantage in manufactured goods rather than agricultural goods.
C) reduced exports and volume of trade for everyone.
D) increased incomes in the countries that pursued this policy.
C
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In the calculation of the CPI, books are given greater weight than magazines if
a. consumers buy more books than magazines. b. the price of books is higher than the price of magazines. c. it costs more to produce books than it costs to produce magazines. d. books are more readily available than magazines to the typical consumer.
Which of the following is not likely to occur because of exchange rate fluctuations?
A. An end to flexible exchange rates worldwide. B. Inflation. C. An increase in the demand for imports. D. A decrease in the demand for exports.
Suppose a given basket of goods and services costs 15 dollars in the United States and 14,250 won in Korea. If the exchange rate is 900 won per dollar, purchasing power parity implies that the:
A. exchange rate has attained its long run equilibrium value. B. won must appreciate to restore purchasing power parity. C. dollar must depreciate to restore purchasing power parity. D. dollar must appreciate to restore purchasing power parity.
Which of the following statements about the result of a deterioration in business conditions that also causes a decrease in a nation's wealth is false?
A. The price of bonds will increase if bond supply decreases more than bond demand. B. The impact on bond prices will be ambiguous since both the bond demand and supply curves shift left. C. Interest rates will increase if bond demand decreases more than bond supply. D. Neither bond demand nor bond supply will shift.