Which of the following is true?
i. When the world price of a good is lower than the price that balances domestic supply and demand, a country gains from exporting the good.
ii. Compared to a no-trade situation, imports make consumers better off.
iii. Quotas raise the domestic price of imported goods.
A) Only i B) Only ii C) Only iii D) i and ii E) ii and iii
E
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According to the new classical theory, if the public correctly anticipates a government policy to increase aggregate demand, then
A) there will be a short-run tradeoff between inflation and unemployment, but there will not be a long-run tradeoff. B) there will be a long-run tradeoff between inflation and unemployment, but there will not be a short-run tradeoff. C) there will be both a long-run and a short-run tradeoff between inflation and unemployment. D) there will be neither a long-run nor a short-run tradeoff between inflation and unemployment. E) there may be a short-run tradeoff between inflation and unemployment, but one cannot say for certain whether there will be a long-run tradeoff.
If home prices rise far above the value of the homeowner's mortgage loan,
A. homeowners will be tempted to default on their mortgage loans. B. default risk faced by lenders tends to decrease. C. homeowners will have greater difficulty obtaining a home equity line of credit. D. default risk faced by lenders tends to increase.