Suppose a country with a large domestic textile industry removed all tariffs on imported textiles, we would expect domestic:
A. textile prices to decline.
B. textile production to increase.
C. textile employment to increase.
D. textile prices to rise.
Answer: A
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Transfer payments are not part of government expenditure on goods and services because transfer payments
A) are not predictable given the nature of their appropriation and allocation. B) do not represent the purchase of a final good or service. C) are not always spent on goods produced in the U.S. D) The premise of the question is incorrect because transfer payments are part of government purchases of goods and services.
"Full employment" refers to the situation when there is
A. 100% employment of the labor force. B. no frictional or structural unemployment. C. no cyclical unemployment. D. a 0% unemployment rate.