Suppose that the rest of the world experiences an economic boom causing an increase in foreign output (Y*). This increase in Y* will not cause which of the following to occur?
A) the domestic country's output to increase
B) the domestic country's consumption to increase
C) the domestic country's output to increase and its trade balance to worsen as imports increase
D) all of the above
E) none of the above
C
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If error in setting the policy is possible,
A) a standard generates smaller welfare losses than a fee when the MSC and MCA are both relatively flat. B) a standard generates smaller welfare losses than a fee when the MSC and MCA are both relatively steep. C) a standard generates smaller welfare losses than a fee when the MSC is relatively steep and the MCA is relatively flat. D) a standard generates smaller welfare losses than a fee when the MSC is relatively flat and the MCA is relatively steep. E) errors in standards and fees have equal welfare losses, so long as the errors are the same in percentage terms.
The factor-price equalization theorem indicates that laborers will end up earning the same wage rate in all countries only if the laborers are allowed to migrate between countries.
Answer the following statement true (T) or false (F)