How are the patterns of international trade, that is the pattern of what different countries export and import, explained?
What will be an ideal response?
Climate explains why Brazil exports coffee. Natural resources explain why Saudi Arabia exports oil. More generally, differences in labor productivity and in the availability of land, labor, and capital within different countries explain patterns of trade. More recent research suggests that there is a significant random component involved, as well.
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More than 80% of American firms are incorporated
a. True b. False Indicate whether the statement is true or false
Suppose the price of one euro is fixed at $1.00. A Dutch oil company discovers new oil reserves in the North Sea and offers the oil for sale. What is the impact on the foreign exchange market?
a. The dollar price of euros decreases from $1.50 to $1.00.
b. Decreasing demand for European goods shifts D2 to D1.
c. U.S. consumers demand more European goods shifting D1 to D2.
d. The quantity of euros demanded changes from Q2 to Q1.