Figure 9-6 -Zelzar Has Decided to End Its Policy of Not Trading

question 117

Multiple Choice

Figure 9-6
-Zelzar has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. Which groups in Zelzar are better off as a result of the new free-trade policy?

• A)producers of incense and consumers of steel
• B)consumers of all three goods
• C)consumers of incense and producers of rugs
• D)producers of steel and consumers of incense

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Definitions:

Maximum Employment

An economic situation in which all available labor resources are being used in the most efficient way possible.

Stable Prices

A situation in the economy where prices of goods and services do not fluctuate significantly in the short term, contributing to economic stability.

Multiplier Effect

The additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending.

Government Expenditures

The total amount spent by the government for its operations, programs, and services.