On paper, the Bank of Canada has ________ instrument independence and ________ goal independence when compared to the Federal Reserve System

The infant industry argument is that

A) comparative advantage is irrelevant to economic growth. B) developing countries have a comparative advantage in agricultural goods. C) developing countries have a comparative advantage in manufacturing. D) developing countries have a potential comparative advantage in manufacturing. E) developing countries have no chance to compete with industrialized countries.

According to purchasing power parity, which of the following is FALSE about an overvalued dollar compared to the Japanese yen?

A) U.S. merchants would be motivated to import more Japanese goods. B) Japanese merchants would tend to export more to the United States. C) Prices in the United States would tend to fall. D) Over the long term, the exchange rate would fall. E) Prices in Japan would tend to rise.