Author Question: A depreciation of the currency can switch spending away from foreign goods and reduce the effect of ... (Read 65 times)

CQXA · **on:** Jun 30, 2018

A depreciation of the currency can switch spending away from foreign goods and reduce the effect of rising incomes on the current account.

Indicate whether the statement is true or false

Question 2

If a country is currently producing at a production point such that the trade line has a slope that is flatter than the slope of the PPC at the same point, then

A) the country can get greater gains from trade if it moves production away from the good on the vertical axis.
B) the country can get greater gains from trade if it moves production toward the good on the vertical axis.
C) the country cannot improve on its gains from trade.
D) There are no gains from trade in this example.