According to Hume's price-specie-flow mechanism, a sudden increase in the money stock of Country A:
a. causes an immediate deflation in Country A.
b. leads to an increase in Country A's imports relative to its exports.
c. leads to an increase in Country A's exports relative to its imports.
d. causes specie from the rest of the world to flow into Country A.
b. leads to an increase in Country A's imports relative to its exports.
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Which of the following would be included in the GDP Price Index, but not the Consumer Price Index?
a. The price of a pair of shoes b. The price of coffee c. The price of a used car d. The price of a bar of soap e. The price of an aircraft carrier
An airline industry study recently reported, "Evidence is abundant that larger firms are not more efficient or less costly simply because they are larger. In fact, other things equal, the largest carriers tend to have a higher level of unit costs, possibly caused by the difficulties of managing an airline of large size." This means that
a. there are increasing returns to scale in the airline industry. b. the airline industry has constant returns to scale. c. the larger airlines are not profitable. d. airlines are experiencing decreasing returns to scale.