Macroeconomics_Test_4 - Assignment Essays

question

Money functions as

answer

a store of value, a unit of account, and a medium of exchange.

question

Currency (paper money plus coins) constitutes about

answer

43 percent of the U.S. M1 money supply.

question

To say that coins are "token money" means that

answer

their face value is greater than their intrinsic value.

question

Which of the following is not part of the M2 money supply?
-money market mutual fund balances
-money market deposit accounts
-currency
-large-denominated time deposits

answer

large-denominated time deposits

question

A $20 bill is a

answer

Federal Reserve note.

question

Assuming no other changes, if balances in money market deposit accounts increase by $50 billion and small-denominated time deposits decrease by $50 billion, the

answer

M1 and M2 money supplies will not change.

question

Currency held within banks is part of

answer

neither the M1 nor the M2 definition of the money supply.

question

If P equals the price level expressed as an index number and $V equals the value of the dollar, then

answer

$V = 1/P

question

When banks bundled mortgage loans and sold the resulting mortgage-backed securities,

answer

they reduced their direct exposure to mortgage default risk but were still exposed through loans to investors in mortgage-backed securities.

question

Banks lost money during the mortgage default crisis because
-of defaulted loans to investors in mortgage-backed securities.
-they held mortgage-backed securities they had purchased from investment firms.
-homebuyers defaulted on mortgages held by the banks.
-of all of these reasons

answer

of all of these reasons

question

How much did the U.S. Congress allocate to the Troubled Asset Relief Program in 2008?

answer

$700 billion

question

Wells Fargo, J.P. Morgan Chase, and Citibank are all primarily

answer

commercial banks

question

Firms whose central business is to offer security advice and buy and sell individual stocks and bonds for clients are known as

answer

securities firms

question

The so-called near monies have the following characteristics, except

answer

part of money supply M1.

question

The use of a credit card is most similar to

answer

obtaining a short-term loan.

question

One major advantage of credit cards used for transactions is that they

answer

allow consumers to coordinate timing and payment for purchases.

question

United States currency has value primarily because it

answer

is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services.

question

Checkable deposits are money because they are

answer

acceptable as payment

question

The Federal Reserve System was established by the Federal Reserve Act of

answer

1913

question

The most important among the Federal Reserve district banks in conducting monetary policy is the

answer

New York bank

question

The Federal Reserve System is divided into

answer

12 districts

question

The main function of the Federal Reserve System is to

answer

control the money supply.

question

The Federal Reserve System is an

answer

independent agency of government.

question

The reason for the Fed being set up as an independent agency of government is to

answer

protect it from political pressure.

question

The destabilizing effects of defaulting mortgages quickly spread throughout the financial system because those mortgages were involved in widespread

answer

securitization

question

The total demand for money curve will shift to the right as a result of

answer

an increase in nominal GDP

question

Which of the following statements is correct? Other things equal,

answer

deflation will shift both the transactions demand curve for money and the total money demand curve to the left.

question

Which of the following is correct?

answer

The asset demand for money is downsloping because the opportunity cost of holding money increases as the interest rate rises.

question

Refer to the given market-for-money diagrams. If each dollar held for transactions is spent four times per year on the average, we can infer that the
(three graphs)

answer

nominal GDP is $800

question

Assume the reserve ratio is 25 percent and Federal Reserve Banks buy $4 million of U.S. securities from the public, which deposits this amount into checking accounts. As a result of these transactions, the supply of money is

answer

directly increased by $4 million and the money-creating potential of the commercial banking system is increased by an additional $12 million.

question

The collateral used for repos and reverse repos is (are)

answer

government bonds

question

The Federal Reserve System regulates the money supply primarily by

answer

altering the reserves of commercial banks, largely through sales and purchases of government bonds.

question

Answer the question on the assumption that the legal reserve ratio is 20 percent. Suppose that the Fed sells $500 of government securities to commercial banks (paid for out of commercial bank reserves) and buys $500 of securities from individuals, who deposit the cash in checking accounts.
As a result of the given transactions, reserves in the banking system will

answer

remain unchanged

question

The Fed's initial step in pursuing restrictive monetary policy using the federal funds rate is to

answer

announce a higher target.

question

Since the financial crisis of 2007-2009, borrowing at the federal funds rate

answer

virtually never happens, as most banks have sufficient excess reserves.

question

Upon which of the following industries is a restrictive monetary policy likely to be most effective?

answer

residential construction

question

The purpose of an expansionary monetary policy is to shift the

answer

aggregate demand curve rightward

question

Refer to the diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. Which of the following would shift the money supply curve from MS1 to MS3?

answer

purchases of U.S. securities by the Fed in the open market

question

Assume that the price level is flexible both upward and downward and that the Fed's policy is to keep the price level from either rising or falling. If aggregate supply increases in the economy, the Fed

answer

will have to increase the money supply to keep the price level from falling.

question

Other things equal, an increase in input prices will

answer

reduce aggregate supply and reduce real output.

question

Other things equal, a reduction in income taxes would

answer

increase consumption and increase aggregate demand.

question

If the dollars held for transactions purposes are, on the average, spent four times a year for final goods and services, then the quantity of money people will wish to hold for transactions purposes is equal to

answer

25 percent of nominal GDP

question

There is an asset demand for money primarily because of which function of money?

answer

store of value

question

Refer to the graph, in which Dt is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money. The market is in equilibrium at the 6 percent rate of interest. If the money supply then decreases as shown, the transaction demand for money will change by (graph going down)

answer

question

If the Fed sells government securities to the general public in the open market,

answer

the Fed gives the securities to the public; the public pays for the securities by writing checks that, when cleared, will decrease commercial bank reserves at the Fed.

question

Assume that the required reserve ratio is 25 percent. If the Federal Reserve sells $120 million in government securities to the general public, the money supply will immediately

answer

decrease by $120 million with this transaction, and the decrease in money supply could eventually reach a maximum of $480 million.

question

Changes in interest rates, ceteris paribus, cause a shift in

answer

the aggregate demand curve, but not the investment demand curve.

question

Which of the following is a monetary policy intended to rein in inflation?

answer

decrease the money supply to shift the aggregate demand curve leftward

question

A newspaper headline reads, "Fed Raises Discount Rate for Third Time This Year." This headline indicates that the Federal Reserve is most likely trying to

answer

reduce inflationary pressures in the economy.

question

Which of the following is considered an advantage of monetary policy compared to fiscal policy?

answer

It is relatively isolated from political pressure

question

Refer to the diagram. Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf. In terms of this diagram, the long-run aggregate supply curve

answer

is a vertical line extending from Qf upward through e, b, and d.

question

Refer to the diagram. Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf. In the short run, demand-pull inflation could best be shown as

answer

a move from b to c on AS2.

question

Refer to the diagram and assume the economy is operating at equilibrium point w. In the long run, an increase in the price level from P2 to P3 would move the economy from point w to point

answer

u (up higher)

question

Refer to the graphs. Growth of production capacity is shown by

answer

both the shift from AB to CD and the shift from X to Y.

question

A rightward shift of the traditional Phillips Curve would suggest that

answer

the rate of inflation is now higher at each rate of unemployment.

question

An adverse aggregate supply shock

answer

can cause stagflation.

question

Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1, 120 to 130 in year 2, and 130 to 140 in year 3. We could conclude that this economy is experiencing

answer

disinflation

question

Government can push the unemployment rate below the natural rate only by

answer

producing a higher rate of inflation than people expect.

question

Refer to the diagram. Assume that the natural rate of unemployment is 5 percent and that the economy is initially operating at point a, where the expected and actual rates of inflation are each 6 percent. If the actual rate of inflation unexpectedly falls from 6 percent to 4 percent, then the unemployment rate will

answer

temporarily rise from 5 percent to 7 percent.

question

In the diagram, (inflation rate and unemployment rate)

answer

any rate of inflation is consistent with the natural rate of unemployment in the long run.

question

The given curve is known as the

answer

Laffer Curve (side curve)

question

If graphed, the relationship shown would depict this economy's

answer

Laffer Curve (20-80%)

question

Inflation in the short run is most likely to result from a(n)

answer

increase in aggregate demand or a decrease in aggregate supply.

question

In the long run, demand-pull inflation

answer

starts out with a rightward shift in the AD curve, followed by a resulting leftward shift of the short-run AS curve.

question

In the cost-push model of inflation, increases in nominal-wage rates that exceed increases in the productivity of labor

answer

decrease aggregate supply and increase the price level in the economy.

question

If the government uses expansionary monetary or fiscal policies to counter the output effects of cost-push inflation, then the economy is likely to experience

answer

an inflationary spiral.

question

Refer to the graph. Suppose that the economy is at an initial equilibrium where the AD1 and AS1 curves intersect. Demand-pull inflation in the long run can best be illustrated as a shift of

answer

AD1 to AD2, consequently making AS1 shift to AS2 (three rows)

question

Refer to the graph. Stagflation in the short run is best represented as resulting from a shift of

answer

AS1 to AS2, given a stable AD1 curve

question

Refer to the graph. If Qf is potential GDP and wages and prices are flexible, then the long-run aggregate supply curve will be

answer

a vertical line at Qf

question

Refer to the graph. Economic growth driven by productivity and technology would be illustrated as a shift of

answer

ASLR1 to ASLR2

question

Given a Phillips Curve with stable and predictable inflation and unemployment rate trade-offs, it appears that

answer

manipulating aggregate demand through fiscal and monetary policies has the effect of causing a movement along the curve.

question

Stagflation's demise during the 1980s resulted in a

answer

shift in the Phillips Curve to the left

question

Refer to the table. Calculating the annual inflation rates would indicate that this economy is experiencing

answer

disinflation

question

Most economists think that

answer

demand-side effects of a tax cut exceed the supply-side effects

question

Economist Arthur Laffer argued that Robin Hood and his men would

answer

collect more tax revenue if they collected only a relatively small tax from each traveler through Sherwood Forest

question

(Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that

answer

people should only consume what they can produce themselves.

question

Assume that before specialization and trade, Latalia produced combination C and Trombonia produced combination B. If these two nations now specialize completely based on comparative advantage, the total gains from specialization and trade will be

answer

4 tons of beans

question

Refer to the graph, which shows the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. When the world price for this product is $0.50, Econland will

answer

import 400 units

question

The principal concept behind comparative advantage is that a nation should

answer

concentrate production on those products for which it has the lowest domestic opportunity cost.

question

If Nations Quirk and Turk only produce aluminum or oil, the accompanying table shows the maximum output of each nation.
Which one of the following terms of trade is most likely to produce mutually beneficial exchange between the two nations?

answer

1 unit of oil for 0.4 unit of aluminum

question

"Offshoring" of certain production activities refers to

answer

businesses shifting production activities from being done domestically to foreign locations.

question

Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will

answer

import copper

question

The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. Assume that Wat originally produced rice and corn at combination C and that Xat originally produced combination B. If the nations now fully specialize based on comparative advantage, the total gains from specialization and trade are

answer

50 units of rice and 50 units of corn

question

Suppose that before specialization and trade, Alpha chose production alternative C and Beta chose production alternative B. After specialization and trade, the gains will be

answer

20 tons of fish

question

The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
The given data show that

answer

Beta is more efficient than Alpha both in catching fish and in producing chips.

question

Which of the U.S. industries below has not seen major shutdowns and layoffs because of free foreign trade?

answer

financial services

question

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good?

answer

Germany in clocks and Taiwan in mugs

question

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2014?

answer

13 percent

question

Refer to the graphs. Terryville has a comparative advantage in producing

answer

product A

question

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if

answer

the prices charged for X and Y reflect their domestic opportunity costs.

question

The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied, and Qd is domestic quantity demanded. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price must be lower than $4 because, at $4,

answer

both nations want to export steel

question

Assume that before specialization and trade, Gamma and Sigma both chose production possibility "C." Now if each specializes according to comparative advantage, the gains from specialization and trade will be

answer

40 tons of tea.

question

Refer to the graph, which shows the import demand and export supply curves for two nations that produce a certain product. In this two-nation model, the equilibrium world price and quantity will be

answer

C and Q2

question

The primary gain from international trade is

answer

more goods than would be attainable through domestic production alone.

question

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting

answer

workers displaced by imports or plant relocations abroad.

question

Which of the following is an example of a capital-intensive commodity?

answer

chemicals

question

Specialization and trade based on comparative advantage allow nations to attain the following results, except

answer

rising total employment

question

In Latalia the domestic real cost of 1 ton of pork

answer

is 5 tons of beans

question

The terms of trade reflect the

answer

ratio at which nations will exchange two goods

question

A nation's import demand curve for a specific product

answer

shows the amount of the product it will import at prices below its domestic price

1 of 100

question

Money functions as

answer

a store of value, a unit of account, and a medium of exchange.

question

Currency (paper money plus coins) constitutes about

answer

43 percent of the U.S. M1 money supply.

question

To say that coins are "token money" means that

answer

their face value is greater than their intrinsic value.

question

Which of the following is not part of the M2 money supply?
-money market mutual fund balances
-money market deposit accounts
-currency
-large-denominated time deposits

answer

large-denominated time deposits

question

A $20 bill is a

answer

Federal Reserve note.

question

Assuming no other changes, if balances in money market deposit accounts increase by $50 billion and small-denominated time deposits decrease by $50 billion, the

answer

M1 and M2 money supplies will not change.

question

Currency held within banks is part of

answer

neither the M1 nor the M2 definition of the money supply.

question

If P equals the price level expressed as an index number and $V equals the value of the dollar, then

answer

$V = 1/P

question

When banks bundled mortgage loans and sold the resulting mortgage-backed securities,

answer

they reduced their direct exposure to mortgage default risk but were still exposed through loans to investors in mortgage-backed securities.

question

answer

of all of these reasons

question

How much did the U.S. Congress allocate to the Troubled Asset Relief Program in 2008?

answer

$700 billion

question

Wells Fargo, J.P. Morgan Chase, and Citibank are all primarily

answer

commercial banks

question

Firms whose central business is to offer security advice and buy and sell individual stocks and bonds for clients are known as

answer

securities firms

question

The so-called near monies have the following characteristics, except

answer

part of money supply M1.

question

The use of a credit card is most similar to

answer

obtaining a short-term loan.

question

One major advantage of credit cards used for transactions is that they

answer

allow consumers to coordinate timing and payment for purchases.

question

United States currency has value primarily because it

answer

is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services.

question

Checkable deposits are money because they are

answer

acceptable as payment

question

The Federal Reserve System was established by the Federal Reserve Act of

answer

1913

question

The most important among the Federal Reserve district banks in conducting monetary policy is the

answer

New York bank

question

The Federal Reserve System is divided into

answer

12 districts

question

The main function of the Federal Reserve System is to

answer

control the money supply.

question

The Federal Reserve System is an

answer

independent agency of government.

question

The reason for the Fed being set up as an independent agency of government is to

answer

protect it from political pressure.

question

The destabilizing effects of defaulting mortgages quickly spread throughout the financial system because those mortgages were involved in widespread

answer

securitization

question

The total demand for money curve will shift to the right as a result of

answer

an increase in nominal GDP

question

Which of the following statements is correct? Other things equal,

answer

deflation will shift both the transactions demand curve for money and the total money demand curve to the left.

question

Which of the following is correct?

answer

The asset demand for money is downsloping because the opportunity cost of holding money increases as the interest rate rises.

question

Refer to the given market-for-money diagrams. If each dollar held for transactions is spent four times per year on the average, we can infer that the
(three graphs)

answer

nominal GDP is $800

question

answer

directly increased by $4 million and the money-creating potential of the commercial banking system is increased by an additional $12 million.

question

The collateral used for repos and reverse repos is (are)

answer

government bonds

question

The Federal Reserve System regulates the money supply primarily by

answer

altering the reserves of commercial banks, largely through sales and purchases of government bonds.

question

answer

remain unchanged

question

The Fed's initial step in pursuing restrictive monetary policy using the federal funds rate is to

answer

announce a higher target.

question

Since the financial crisis of 2007-2009, borrowing at the federal funds rate

answer

virtually never happens, as most banks have sufficient excess reserves.

question

Upon which of the following industries is a restrictive monetary policy likely to be most effective?

answer

residential construction

question

The purpose of an expansionary monetary policy is to shift the

answer

aggregate demand curve rightward

question

answer

purchases of U.S. securities by the Fed in the open market

question

answer

will have to increase the money supply to keep the price level from falling.

question

Other things equal, an increase in input prices will

answer

reduce aggregate supply and reduce real output.

question

Other things equal, a reduction in income taxes would

answer

increase consumption and increase aggregate demand.

question

answer

25 percent of nominal GDP

question

There is an asset demand for money primarily because of which function of money?

answer

store of value

question

answer

question

If the Fed sells government securities to the general public in the open market,

answer

the Fed gives the securities to the public; the public pays for the securities by writing checks that, when cleared, will decrease commercial bank reserves at the Fed.

question

Assume that the required reserve ratio is 25 percent. If the Federal Reserve sells $120 million in government securities to the general public, the money supply will immediately

answer

decrease by $120 million with this transaction, and the decrease in money supply could eventually reach a maximum of $480 million.

question

Changes in interest rates, ceteris paribus, cause a shift in

answer

the aggregate demand curve, but not the investment demand curve.

question

Which of the following is a monetary policy intended to rein in inflation?

answer

decrease the money supply to shift the aggregate demand curve leftward

question

A newspaper headline reads, "Fed Raises Discount Rate for Third Time This Year." This headline indicates that the Federal Reserve is most likely trying to

answer

reduce inflationary pressures in the economy.

question

Which of the following is considered an advantage of monetary policy compared to fiscal policy?

answer

It is relatively isolated from political pressure

question

answer

is a vertical line extending from Qf upward through e, b, and d.

question

Refer to the diagram. Assume that nominal wages initially are set on the basis of the price level P2 and that the economy initially is operating at its full-employment level of output Qf. In the short run, demand-pull inflation could best be shown as

answer

a move from b to c on AS2.

question

Refer to the diagram and assume the economy is operating at equilibrium point w. In the long run, an increase in the price level from P2 to P3 would move the economy from point w to point

answer

u (up higher)

question

Refer to the graphs. Growth of production capacity is shown by

answer

both the shift from AB to CD and the shift from X to Y.

question

A rightward shift of the traditional Phillips Curve would suggest that

answer

the rate of inflation is now higher at each rate of unemployment.

question

An adverse aggregate supply shock

answer

can cause stagflation.

question

Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1, 120 to 130 in year 2, and 130 to 140 in year 3. We could conclude that this economy is experiencing

answer

disinflation

question

Government can push the unemployment rate below the natural rate only by

answer

producing a higher rate of inflation than people expect.

question

answer

temporarily rise from 5 percent to 7 percent.

question

In the diagram, (inflation rate and unemployment rate)

answer

any rate of inflation is consistent with the natural rate of unemployment in the long run.

question

The given curve is known as the

answer

Laffer Curve (side curve)

question

If graphed, the relationship shown would depict this economy's

answer

Laffer Curve (20-80%)

question

Inflation in the short run is most likely to result from a(n)

answer

increase in aggregate demand or a decrease in aggregate supply.

question

In the long run, demand-pull inflation

answer

starts out with a rightward shift in the AD curve, followed by a resulting leftward shift of the short-run AS curve.

question

In the cost-push model of inflation, increases in nominal-wage rates that exceed increases in the productivity of labor

answer

decrease aggregate supply and increase the price level in the economy.

question

If the government uses expansionary monetary or fiscal policies to counter the output effects of cost-push inflation, then the economy is likely to experience

answer

an inflationary spiral.

question

Refer to the graph. Suppose that the economy is at an initial equilibrium where the AD1 and AS1 curves intersect. Demand-pull inflation in the long run can best be illustrated as a shift of

answer

AD1 to AD2, consequently making AS1 shift to AS2 (three rows)

question

Refer to the graph. Stagflation in the short run is best represented as resulting from a shift of

answer

AS1 to AS2, given a stable AD1 curve

question

Refer to the graph. If Qf is potential GDP and wages and prices are flexible, then the long-run aggregate supply curve will be

answer

a vertical line at Qf

question

Refer to the graph. Economic growth driven by productivity and technology would be illustrated as a shift of

answer

ASLR1 to ASLR2

question

Given a Phillips Curve with stable and predictable inflation and unemployment rate trade-offs, it appears that

answer

manipulating aggregate demand through fiscal and monetary policies has the effect of causing a movement along the curve.

question

Stagflation's demise during the 1980s resulted in a

answer

shift in the Phillips Curve to the left

question

Refer to the table. Calculating the annual inflation rates would indicate that this economy is experiencing

answer

disinflation

question

Most economists think that

answer

demand-side effects of a tax cut exceed the supply-side effects

question

Economist Arthur Laffer argued that Robin Hood and his men would

answer

collect more tax revenue if they collected only a relatively small tax from each traveler through Sherwood Forest

question

(Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that

answer

people should only consume what they can produce themselves.

question

answer

4 tons of beans

question

Refer to the graph, which shows the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. When the world price for this product is $0.50, Econland will

answer

import 400 units

question

The principal concept behind comparative advantage is that a nation should

answer

concentrate production on those products for which it has the lowest domestic opportunity cost.

question

answer

1 unit of oil for 0.4 unit of aluminum

question

"Offshoring" of certain production activities refers to

answer

businesses shifting production activities from being done domestically to foreign locations.

question

answer

import copper

question

answer

50 units of rice and 50 units of corn

question

Suppose that before specialization and trade, Alpha chose production alternative C and Beta chose production alternative B. After specialization and trade, the gains will be

answer

20 tons of fish

question

The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
The given data show that

answer

Beta is more efficient than Alpha both in catching fish and in producing chips.

question

Which of the U.S. industries below has not seen major shutdowns and layoffs because of free foreign trade?

answer

financial services

question

answer

Germany in clocks and Taiwan in mugs

question

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2014?

answer

13 percent

question

Refer to the graphs. Terryville has a comparative advantage in producing

answer

product A

question

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if

answer

the prices charged for X and Y reflect their domestic opportunity costs.

question

answer

both nations want to export steel

question

answer

40 tons of tea.

question

Refer to the graph, which shows the import demand and export supply curves for two nations that produce a certain product. In this two-nation model, the equilibrium world price and quantity will be

answer

C and Q2

question

The primary gain from international trade is

answer

more goods than would be attainable through domestic production alone.

question

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting

answer

workers displaced by imports or plant relocations abroad.

question

Which of the following is an example of a capital-intensive commodity?

answer

chemicals

question

Specialization and trade based on comparative advantage allow nations to attain the following results, except

answer

rising total employment

question

In Latalia the domestic real cost of 1 ton of pork

answer

is 5 tons of beans

question

The terms of trade reflect the

answer

ratio at which nations will exchange two goods

question

A nation's import demand curve for a specific product

answer

shows the amount of the product it will import at prices below its domestic price

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