A bond is a b. certificate of indebtedness. A cable television broadcast of a movie is b. excludable and not rival in consumption. A country has a comparative advantage in a product if the world price is b. higher than that country’s domestic price without trade. A decrease in demand is represented by d. a leftward shift of a demand curve. A Fed sale of bonds will cause a reduction in the interest rate and an increase in the equilibrium quantity of money b. False. A firm in China sells toys to a U.S. department store chain. Other things the same, these sales b. decrease U.S. net exports and increase Chinese net exports. A firm in India hires a U.S. firm to provide economic forecasts. By itself this transaction a. increases U.S. exports and so increases the U.S. trade balance. A logical starting point from which the study of international trade begins is d. the principle of comparative advantage. A mortgage interest deduction would be considered d. a tax loophole. A recession today may cause reduced future output capacity because of which of the following: b. a decline in investment spending. A rightward shift in the aggregate demand curve generates a __________ inflation and __________ output. c. demand-pull; higher. A shortage exists in a market if c. the current price is below its equilibrium price. A successful expansionary monetary policy will increase: a. the money supply and the level of investment. A tax increase on households: b. decreases national income by lowering household consumption. A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except c. The toll provides an incentive for commuters to drive more fuel-efficient cars. A U.S. firm buys bonds issued by a technology center in India. This purchase is an example of U.S. a. foreign portfolio investment. By itself it is an increase in U.S. holdings of foreign bonds and increases U.S. net capital outflow. According to liquidity preference theory, a decrease in the price level shifts the c. money demand curve leftward, so the interest rate decreases. According to purchasing-power parity, which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level? b. the nominal exchange rate, but not the real exchange rate. Aggregate demand shifts right when the government b. increases the money supply. An appreciation of the U.S. real exchange rate induces U.S. consumers to buy c. fewer domestic goods and more foreign goods. An important factor in the decline of the U.S. textile industry over the past 100 or so years is a. foreign competitors that can produce quality textile goods at low cost. An income tax in which the average tax rate is the same for all taxpayers would be considered a
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