Spencer and Brander's model highlights the conventional assumption that
A) government involvement in business or in the economy tends to fail.
B) government subsidies tend to waste taxpayer's money.
C) government subsidies cannot create a successfully competing export.
D) government tends to distort when it displaces Adam Smith's Invisible Hand.
E) government subsidies can produce profits that exceed the subsidy's value.
E
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Nontradables are cited as a reason why purchasing power parity doesn't hold because:
A. there is no economic opportunity to profit if the goods cannot be sold in another market for another price. B. location-specific goods are impossible to calculate a price elsewhere for. C. goods that you can't transport cannot be sold for a profit elsewhere, even if the price differs in different locations. D. All of these statements are true.
Suppose a bank has $600,000 in deposits, a required reserve ratio of 5 percent, and bank reserves of $90,000. Then the bank can make new loans in the amount of
A. $60,000. B. $5,400. C. $90,000. D. $30,000.