An increase in a country's rate of inflation is apt to
A) reduce its imports and improve its trade balance.
B) lower its nominal rate of interest and encourage an inflow of capital.
C) worsen its balance of trade and balance of payments.
D) decrease demand for the country's currency.
Answer: C
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There are very few, if any, good substitutes for motor oil. What does this imply?
a) The supply of motor oil would tend to be price elastic. b) The demand for motor oil would tend to be price elastic. c) The demand for motor oil would tend to be price inelastic. d) The demand for motor oil would tend to be income elastic.
With asymmetric information firms might be reluctant to improve the quality of their products because
A) it costs them more to produce the better quality product. B) they are not able to completely capture the benefits of the improvement. C) consumers do not value the better product. D) consumers are better informed about the product and value the new product less.