What is the expected outcome when trade occurs in a monopolistically competitive industry if the nations have similar tastes, technology, products, and costs?
a. No trade is possible.
b. Consumers are left with no choices.
c. Each firm has a larger market in which to sell, and consumers have more choices of sellers and products.
d. Transportation costs become the driving factor.
Ans: c. Each firm has a larger market in which to sell, and consumers have more choices of sellers and products.
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A major cause of the Great Recession was:
a. The liberalization of U.S. banking regulations that led to excessive risk taking. b.Excessive foreign exchange speculation. c. Contractionary fiscal policies. d. Excessive money creation by the Federal Reserve immediately before and during the downturn. e. None of the above.
Economic growth rates in follower countries:
A. tend to be lower than in leader countries because labor forces in follower countries are too small. B. tend to exceed those in leader countries because followers can cheaply adopt the new technologies that leaders developed at relatively high costs. C. will never bring real GDP per capita up to the same levels as in leader countries, even if follower growth rates are greater than those in leader countries. D. typically average about 2 percent per year.