The gains from trade are divided in proportion to the price changes that trade brings to the trading countries.

If the public has correct rational expectations and the Fed increases both reserve requirements and the discount rate, it would be expected to result in: a. a higher level of real output and a lower price level. b. a lower price level but no change in real output

c. a higher price level and a reduced level of real output. d. a higher price level but no change in real output.

If the calculated price elasticity of demand between two points is -1.5, demand is

A. inelastic. B. elastic. C. unit-elastic. D. unresponsive to price.