Which of the following statements is(are) FALSE?
I. Trade creation is always bad for countries.
II. Trade diversion is always good for countries.
III. Regional trade agreements never cause welfare losses.
a. I
b. II
c. III
d. I, II, and III
Ans: d. I, II, and III
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If the exchange rate changes from 20 cents per franc to 18 cents per franc, the U.S. dollar has
a. appreciated, since its value has increased b. appreciated, since its value has declined c. depreciated, making French goods more expensive in U.S. dollars d. depreciated, since its value has declined e. depreciated, since its value has increased
Consider the following statements:
a. Soda drinkers purchase more soda from a grocery store that sells soda at a lower price than other rival grocery stores in the area. b. Homeowners do not take steps to increase security even though they believe it is more costly to allow burglaries than to install security monitoring equipment. c. Manufacturers produce less of a particular cell phone when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives? A) a only. B) b only. C) c only. D) a and b. E) a, b, and c.