If a Small Open Economy Is in Long-Run Equilibrium with No

question 106

Multiple Choice

If a small open economy is in long-run equilibrium with no foreign debt:

• A) its balance of trade is positive.
• B) its balance of trade is zero.
• C) its balance of trade is negative.
• D) not enough information is given to determine the sign of the trade balance.

---

Definitions:

Total Revenue

The total income generated from the sale of goods or services by a company before any costs or expenses are deducted.

Midpoint Formula

In economics, it's often used to compute the elasticity of demand or supply, calculating the percentage change in quantity demanded or supplied relative to the percentage change in price.

Price Of Pretzels

The amount of money required to purchase a specified quantity of pretzels.

Inelastic Portion

The segment of the demand curve where consumers are relatively unresponsive to price changes.