Question

1.) In analyzing the gains and losses from international trade, to say that Moldova is a...

1.) In analyzing the gains and losses from international trade, to say that Moldova is a small country is to say that

a. Moldova can only import goods; it cannot export goods.

b. Moldova’s choice of which goods to export and which goods to import is not based on the principle of comparative advantage.

c. only the domestic price of a good is relevant for Moldova; the world price of a good is irrelevant.

d. Moldova is a price taker

2.) Which of the following ideas is the most plausible?

a.Tax revenue is more likely to increase when a low tax rate is increased than when a high tax rate is increased.

b. Tax revenue is less likely to increase when a low tax rate is increased than when a high tax rate is increased.

c. Tax revenue is likely to increase by the same amount when a low tax rate is increased and when a high tax rate is increased.

d. Decreasing a tax rate can never increase tax revenue.

2.) Compared to several decades ago, the economy of the United States is

a. less dependent on international trade.

b. more likely to run a trade surplus with the rest of the world.

c. more dependent on international trade.

d. less likely to be affected by foreign economic crises.

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Answer #1

1) In analyzing gains and loses..
Ans. d Moldova is a price taker
Explanation: When a country is small it means that its supply and demand of the good is negligible compared to the that of the rest of the world. AS result, it is unable to affect world prices and is a price taker.

2) Which of the following..
a. Tax revenue is more likely to increase...
Explanation: The Laffer curve shows the relation between tax rate and tax revenue.

3) Compared to several decades ago..
c) More dependant on international trade

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