If a Home Country Is Exporting Corn and Importing Bikes

question 160

Multiple Choice

If a home country is exporting corn and importing bikes and if the relative price P_c/P_b is increasing, then:

• A) the home country will export less corn.
• B) the home country will export more corn.
• C) the home country will import the same number of bikes.
• D) there is no change in the trade pattern for the home country.

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Definitions:

Aggregate Demand Curve

A graphical representation showing the relationship between the overall price level in the economy and the total demand for goods and services at that level.

Expected Price Level

The anticipated average price of goods and services in an economy at a future date.

Private Sector

The part of the economy that is owned and operated by individuals and companies for profit, not controlled by the state.

Passive Approach

A management strategy that seeks to track or replicate the performance of a market index or benchmark, rather than attempting to outperform it.