Suppose the South had won the Civil War, and trade no longer took place between Northern and Southern states. Explain whether the sum of the North and South GDPs would have been higher or lower than with the current United States
North and South added together would have a lower GDP than the United States. Intrastate trade adds to GDP by allowing specialization. Prohibiting trade among the states would force Northern states to grow their own agricultural products and Southern states to produce their own manufactured goods.
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If one dollar is initially equal in value to one euro and demand for euros increases, then each dollar will be worth
a. more than one euro, and European imports will be cheaper in the United States b. less than one euro, and European imports will be more expensive in the United States c. more than one euro, and European imports will be more expensive in the United States d. less than one euro, and European imports will be cheaper in the United States e. the same as the euro, and there will be no change in the values of imports or exports
The adjustment of nominal incomes to changes in the price level (CPI) is fixed because of the: a. volatility of investment spending
b. existence of long-term contracts. c. complete information possessed by workers. d. all of the above.