Refer to Figure 26-7. Suppose the economy is in a recession and the Fed pursues an expansionary monetary policy. Using the static AD-AS model in the figure above, this would be depicted as a movement from

What does the HO model predict will happen to the real returns to factors of production after trade occurs?

a. Labor and capital must be used together in production, and there is no room for competition for remuneration. b. Capital owners always get the "gains from trade." c. Resources used intensively in export industries (such as labor in China and capital in the United States) will see an increase in their returns, whereas the resources used intensively in importcompeting industries will see a decline in their return. d. Poor nations will always get the least returns to their factors of production.

If price is above average total costs, the firm

A) is earning positive profits. B) is earning negative profits. C) is making a normal rate of return on its capital investment. D) may be earning a positive or negative profit depending upon costs.