In a Two-Period SOE Model with Production, a Negative Total

question 18

Multiple Choice

In a two-period SOE model with production, a negative total factor productivity shock abroad

• A) increases foreign output and increases domestic output.
• B) decreases foreign output and decreases domestic output.
• C) increases foreign output and decreases domestic output.
• D) decreases foreign output and increases domestic output.
• E) decreases foreign output and leaves domestic output unchanged.

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Definitions:

Communist Rule

A system of government where the state plans and controls the economy and a single, often authoritarian party holds power, claiming to make progress toward a higher social order in which all goods are equally shared by the people.

Crimean War

A military conflict fought from 1853 to 1856 in which Russia lost to an alliance of the Ottoman Empire, France, Britain, and Sardinia, highlighting the frailties of the Russian military.

Eastern Speculators

Individuals or companies that invest in land, stocks, or other ventures in the eastern regions of a country hoping to make a profit.