A large country imposes capital controls that prohibit foreign borrowing and lending by domestic residents. The country is currently running a financial account surplus. The imposition of the capital controls will cause

You hire some of your friends to help you move to a new house. You pay them a total of $200 and buy them dinner at Pizza Hut. Which of the following is true?

A) Hiring your friends is an illegal activity and should not be counted in GDP. B) Neither the $200 nor the dinner should be counted in GDP because both are household production. C) The dinner at Pizza Hut should be counted as part of GDP, but not the $200. D) The $200 should be counted as part of GDP but not the dinner at Pizza Hut. E) If your friends do not report the $200 on their tax forms, it becomes part of the underground economy.

Halifax & Smyth (H&S) is a clothier that specializes in expensive men's suits, and the firm makes the suits from wool fabrics that are woven by one of the firm's divisions

This division is not the only source for this material, and H&S could buy or sell wool fabric in the outside competitive market. H&S will buy some of the wool fabric that it needs for suits from the outside market if the: A) market price is less than the optimal transfer price if the outside market did not exist. B) market price is less than the point where the net marginal revenue of weaving wool fabric intersects the marginal cost of wool fabric. C) market price is less than the point where the net marginal revenue of assembling men's suits intersects the marginal cost of assembly. D) Both A and B are correct.