It takes more money to purchase the same amount of goods when prices _____. Therefore, the value of your money has ____

f the Fed wants to increase bank reserves, it can:

A. Raise the discount rate. B. Buy government bonds from the public. C. Increase the minimum reserve ratio. D. Decrease the money multiplier.

One of the commonly used assumptions in deriving the Heckscher-Ohlin model is that tastes are homothetic, or that if the per capita incomes were the same in two countries, the proportions of their expenditures allocated to each product would be the

same as it is in the other country. Imagine that this assumption is false, and that in fact, the tastes in each country are strongly biased in favor of the product in which it has a comparative advantage. How would this affect the relationship between relative factor abundance between the two countries, and the nature (factor-intensity) of the product each exports? What if the taste bias favored the imported good?