An export trading company (ETC) works with many manufacturers rather than representing a single manufacturer.

According to the theory of purchasing power parity, in the long run

A) the nominal exchange rate should equal the domestic inflation rate. B) the domestic inflation rate should equal the foreign inflation rate. C) the real exchange rate should equal 1. D) the real exchange rate should equal the domestic inflation rate divided by the foreign inflation rate.

In the case of a small country, the effects of a quota and a tariff are (almost) identical if

A. the government allocates import licenses directly to the public using a free lottery system. B. the government allocates licenses for free to importers using a rule or process that involves (almost) no resource cost. C. the government allocates licenses to importers through application and selection procedures that require the use of substantial resources. D. the government auctions off import licenses to the highest bidder.