Price increases always reduce economic efficiency
a. True
b. False
Indicate whether the statement is true or false
False
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By selling additional wheat, each U.S. wheat farmer
A) decreases his total revenue because the demand for his wheat is elastic. B) decreases his total revenue because the demand for his wheat is inelastic. C) increases his total revenue because the demand for his wheat is elastic. D) increases his total revenue because the demand for his wheat is inelastic.
What impact does a decrease in the price level in the United States have on net exports and why?
A) A decrease in the price level reduces net exports because lower prices increase American spending on imports. B) A decrease in the price level increases net exports because lower prices increase the value of the dollar. C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar. D) A decrease in the price level increases net exports by reducing the relative cost of American goods.