An economy is considered a small open economy if it
A) is too small to affect the world real interest rate.
B) has GDP less than 1% of world GDP.
C) doesn't trade internationally.
D) has a zero trade balance.
A
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In one hour John can produce 20 loaves of bread or 8 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?
A) Phyllis has a comparative advantage in producing bread. B) John has a comparative advantage in producing cakes. C) Phyllis has an absolute advantage in both goods. D) John has an absolute advantage in both goods. E) Phyllis has a comparative advantage in producing both cakes and bread.
Competitive markets will generally produce
A) too much of a public good. B) too little of a public good. C) the efficient amount of a public good. D) the efficient amount of a public good in the short run, but not in the long run.