If demand increases, the increase in price will be smaller if demand and supply are highly inelastic.

Which of the following is NOT a reason Mexico and Canada wanted a free trade agreement with the United States?

A) Mexico wanted increased direct foreign investment. B) Canada wanted to guarantee access to the U.S. market. C) Mexico wanted the United States to lower its high barriers to Mexican products. D) Canada wanted its firms to become more globally competitive. E) Mexico wanted to institutionalize its economic reforms.

As the service sector in the U.S. economy grows, traditional productivity measures will become:

a. biased downward, because the qualitative aspects of a service tend to be understated. b. biased upward, because quantitative improvements in the service sector tend to be overstated. c. biased upward, because prices in the service sector always rise faster than prices in manufacturing. d. biased downward, because service output leads to a long-run decline in the inflation rate. e. completely inappropriate for measuring even manufacturing output.