When U.S. real GDP increases, U.S. imports
A) increase by more than the change in real GDP.
B) decrease by less than the change in real GDP.
C) decrease by the same amount.
D) increase by less than the change in real GDP.
E) increase by the same amount.
D
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Critics of flexible exchange rates argue that flexible rates: a. reduce uncertainty in international trade
b. automatically create an equilibrium price for each currency in the foreign exchange market. c. make nations more constrained in carrying out internal macroeconomic policies. d. increase uncertainty in international trade.
Oftentimes, the socially optimal quantity for a product that imposes external costs on the society is not zero, but something greater than zero. This is because completely eliminating the externality would involve:
A. A much greater marginal benefit than marginal cost B. A much greater marginal cost than marginal benefit C. Having shortages in the market D. Having surpluses in the market