International Economics: Theory and Policy 9th Edition

Chapter 1 Introduction .1 Chapter Organization What Is International Economics About? The Gains from Trade The Pattern of Trade How Much Trade? Balance of Payments Exchange Rate Determination International Policy Coordination The International Capital Market International Economics: Trade and Money .2 Chapter Overview The intent of this chapter is to provide both an overview

48Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 10 The Political Economy of Trade Policy .1 Chapter Organization The Case for Free Trade Free Trade and Efficiency Additional Gains from Free Trade Rent-Seeking Political Argument for Free Trade Case Study: The Gains from 1992 National Welfare Arguments Against Free Trade The Terms of Trade

nAnswers to Textbook Problems 1. The arguments for free trade in this quote include: Free trade allows consumers and producers to make decisions based upon the marginal cost and benefits associated with a good when costs and prices are undistorted by government policy. The Philippines is small, so it will have

54Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 11 Trade Policy in Developing Countries .1 nChapter Organization Import-Substituting Industrialization The Infant Industry Argument Promoting Manufacturing Through Protectionism Case Study: Mexico Abandons Import-Substituting Industrialization Results of Favoring Manufacturing: Problems of Import-Substituting Industrialization Trade Liberalization Since 1985 Trade and Growth: Takeoff in Asia Box: Indias Boom Summary .2

nAnswers to Textbook Problems 1. The countries that seem to benefit most from international trade include many of the countries of the Pacific Rim: South Korea, Taiwan, Singapore, Hong Kong, Malaysia, Indonesia, and others. Though the experience of each country is somewhat different, most of these countries employed some kind

Chapter 12 Controversies in Trade Policy 57 Chapter 12 Controversies in Trade Policy .1 Chapter Organization Sophisticated Arguments for Activist Trade Policy Technology and Externalities Imperfect Competition and Strategic Trade Policy Box: A Warning from Intels Founder Case Study: When the Chips Were Up Globalization and Low-Wage Labor The Anti-Globalization Movement Trade and Wages Revisited

Answers to Textbook Problems 1. The main disadvantage is that it can lead to both rent-seeking and beggar-thy-neighbor policies, which can increase one countrys welfare at the other countrys expense. Such policies can lead to a trade war in which every country is worse off, even though one country could become

Chapter 13 National Income Accounting and the Balance of Payments 63 Overview of Section III: Exchange Rates and Open-Economy Macroeconomics Section III of the textbook consists of six chapters: Chapter 13 National Income Accounting and the Balance of Payments Chapter 14 Exchange Rates and the Foreign Exchange Market: An Asset Approach Chapter 15

1. The reason for including only the value of final goods and services in GNP, as stated in the question, is to avoid the problem of double counting. Double counting will not occur if intermediate imports are subtracted and intermediate exported goods are added to GNP accounts. Consider the sale

Chapter 14 Exchange Rates and the Foreign Exchange Market: An Asset Approach 69 Chapter 14 Exchange Rates and the Foreign Exchange Market: An Asset Approach .1 Chapter Organization Exchange Rates and International Transactions Domestic and Foreign Prices Exchange Rates and Relative Prices The Foreign Exchange Market The Actors Characteristics of the Market Spot Rates and

nAnswers to Textbook Problems 1. At an exchange rate of 1.05 $ per euro, a 5 euro bratwurst costs 1.05$/euro 5 euros $5.25. Thus, the bratwurst in Munich is $1.25 more expensive than the hot dog in Boston. The relative price is $5.25/$4 1.31. A bratwurst costs 1.31 hot dogs.

76Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 15 Money, Interest Rates, and Exchange Rates .1 Chapter Organization Money Defined: A Brief Review Money as a Medium of Exchange Money as a Unit of Account Money as a Store of Value What Is Money? How the Money Supply Is Determined The Demand

nAnswers to Textbook Problems 1. A reduction in the home money demand causes interest rates in the home country to fall from Rh,1 to Rh,2. With no change in expectations, there will be a depreciation of the home currency from E1 to E2 as investors shift their savings into higher-interest-paying

82Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 16 Price Levels and the Exchange Rate in the Long Run .1 nChapter Organization The Law of One Price Purchasing Power Parity The Relationship Between PPP and the Law of One Price Absolute PPP and Relative PPP A Long-Run Exchange Rate Model Based on PPP The Fundamental

nAnswers to Textbook Problems 1. Relative PPP predicts that inflation differentials are matched by changes in the exchange rate. Under relative PPP, the franc/ruble exchange rate would fall by 95 percent with inflation rates of 100 percent in Russia and 5 percent in Switzerland. Under relative PPP, the franc/ruble exchange rate

88Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 17 Output and the Exchange Rate in the Short Run .1 Chapter Organization Determinants of Aggregate Demand in an Open Economy Determinants of Consumption Demand Determinants of the Current Account How Real Exchange Rate Changes Affect the Current Account How Disposable Income Changes Affect the

nAnswers to Textbook Problems 1. A decline in investment demand decreases the level of aggregate demand for any level of the exchange rate. Thus, a decline in investment demand causes the DD curve to shift to the left. exchange rate. Thus, a decline in investment demand causes the DD curve to

Chapter 22 Developing Countries: Growth, Crisis, and Reform 125 Chapter 18 Developing Countries: Growth, Crisis, and Reform .1 nChapter Organization Income, Wealth, and Growth in the World Economy The Gap Between Rich and Poor Has the World Income Gap Narrowed Over Time? Structural Features of Developing Countries Developing-Country Borrowing and Debt The Economics of Financial Inflows

nAnswers to Textbook Problems 1. The amount of seigniorage governments collect does not grow monotonically with the rate of monetary expansion. The real revenue from seigniorage equals the money growth rate times the real balances held by the public. But higher monetary growth leads to higher expected future inflation and

Chapter 19 International Monetary Systems: An Historical Overview 107 Overview of Section IV: International Macroeconomic Policy Section IV of the text consists of four chapters: Chapter 19 International Monetary Systems: An Historical Overview Chapter 20 Optimum Currency Areas and the European Experience Chapter 21 Financial Globalization: Opportunity and Crisis Chapter 22 Developing Countries:

1. a. Since it takes considerable investment to develop uranium mines, you would want a larger current-account deficit to allow your country to finance some of the investment with foreign savings. current-account deficit to allow your country to finance some of the investment with foreign savings. current-account deficit to allow your country

Chapter 2World Trade: An Overview5 Overview of Section I: International Trade Theory Section I of the text consists of seven chapters: Chapter 2 World Trade: An Overview Chapter 3 Labor Productivity and Comparative Advantage: The Ricardian Model Chapter 4 Specific Factors and Income Distribution Chapter 5 Resources and Trade: The Heckscher-Ohlin Model Chapter 6

Answers to Textbook Problems 1. We saw that not only is GDP important in explaining how much two countries trade, but also, distance is crucial. Given its remoteness, Australia faces relatively high costs of transporting imports and exports, thereby reducing the attractiveness of trade. Since Canada has a border with a

Chapter 21 Financial Globalization: Opportunity and Crisis 121 Chapter 20 Financial Globalization: Opportunity and Crisis .1 nChapter Organization The International Capital Market and the Gains from Trade Three Types of Gains from Trade Risk Aversion Portfolio Diversification as a Motive for International Asset Trade The Menu of International Assets: Debt versus Equity International

nAnswers to Textbook Problems 1. The better diversified portfolio is the one that contains stock in the dental company and the dairy company. Good years for the candy company may be correlated with good years for the dental company, and conversely, the return from a portfolio consisting of these stocks

8Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 3 Labor Productivity and Comparative Advantage: The Ricardian Model .1 Chapter Organization The Concept of Comparative Advantage A One-Factor Economy Production Possibilities Relative Prices and Supply Trade in a One-Factor World Determining the Relative Price After Trade Box: Comparative Advantage in Practice: The Case of Babe Ruth The

Answers to Textbook Problems 1. a. The production possibility curve is a straight line that intercepts the apple axis at 400 (1200/3) and the banana axis at 600 (1200/2). and the banana axis at 600 (1200/2). and the banana axis at 600 (1200/2). b. The opportunity cost of apples in terms of

12Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 4 Specific Factors and Income Distribution .1 Chapter Organization The Specific Factors Model Box: What Is a Specific Factor? Assumptions of the Model Production Possibilities Prices, Wages, and Labor Allocation Relative Prices and the Distribution of Income International Trade in the Specific Factors Model Income Distribution

Answers to Textbook Problems 1. Texas and Louisiana are both oil-producing states. A decrease in the price of oil will reduce output in these two states, hurting owners of capital and workers in the oil industry. While some capital will be able to migrate to other sectors (for example, those

18Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 5 Resources and Trade: The Heckscher-Ohlin Model .1 Chapter Organization Model of a Two-Factor Economy Prices and Production Choosing the Mix of Inputs Factor Prices and Goods Prices Resources and Output Effects of International Trade Between Two-Factor Economies Relative Prices and the Pattern of Trade

nAnswers to Textbook Problems 1. a. The first step is to compute the opportunity cost of both cloth and food. We are given the following resource constraints: aKC 2, aLC 2, aKF 3, aLF 1L 2,000; K 3,000 Each unit of cloth is produced with 2 units of capital and 2

24Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 6 The Standard Trade Model .1 Chapter Organization A Standard Model of a Trading Economy Production Possibilities and Relative Supply Relative Prices and Demand The Welfare Effect of Changes in the Terms of Trade Determining Relative Prices Economic Growth: A Shift of the RS

1. Note how welfare in both countries increases as the two countries move from production patterns governed by domestic prices (dashed line) to production patterns governed by world prices (straight line). Note how welfare in both countries increases as the two countries move from production patterns governed by domestic prices (dashed line)

30Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Chapter 7 External Economies of Scale and the International Location of Production .1 Chapter Organization Economies of Scale and International Trade: An Overview Economies of Scale and Market Structure The Theory of External Economies Specialized Suppliers Labor Market Pooling Knowledge Spillovers External Economies and Market Equilibrium External

1. Cases a and d reflect external economies of scale since concentration of the production of an industry in a few locations reduces the industrys costs even when the scale of operation of individual firms remains small. External economies need not lead to imperfect competition. The benefits of geographical concentration

Chapter 8 Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises 35 Chapter 8 Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises .1 Chapter Organization The Theory of Imperfect Competition Monopoly: A Brief Review Monopolistic Competition Monopolistic Competition and Trade The Effects of Increased Market Size Gains from an

nAnswers to Textbook Problems 1. With internal economies of scale, there is imperfect competition and firms set marginal revenue equal to marginal cost. Unlike the case of perfectly competitive markets, under monopoly marginal revenue is not equal to price. Marginal revenue is always less than price under imperfectly competitive markets because to

42Krugman/Obstfeld/Melitz International Economics: Theory & Policy, Ninth Edition Overview of Section II: International Trade Policy Section II of the text consists of four chapters: Chapter 9 The Instruments of Trade Policy Chapter 10 The Political Economy of Trade Policy Chapter 11 Trade Policy in Developing Countries Chapter 12 Controversies in Trade Policy .1

nAnswers to Textbook Problems 1. The import demand equation, MD, is found by subtracting the home supply equation from the Home demand equation. This results in MD 80 40 P. Without trade, domestic prices and quantities adjust such that import demand is 0. Thus, the price in the absence

Contents Chapter 1 Introduction 1 Overview of Section I: International Trade Theory 3 Chapter 2 World Trade: An Overview 5 Chapter 3 Labor Productivity and Comparative Advantage: The Ricardian Model 8 Chapter 4 Specific Factors and Income Distribution 12 Chapter 5 Resources and Trade: The Heckscher-Ohlin Model 18 Chapter 6 The Standard

1 Answer: A Page Ref: 2 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 2 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 2 Difficulty: Easy Question Status: New AACSB Codes:

1 Answer: A Page Ref: 219-224 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 219-224 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 219-224 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

1 Answer: C Page Ref: 256-261 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: C Page Ref: 256-261 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: C Page Ref: 256-261 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

1 Answer: D Page Ref: 271-279 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: D Page Ref: 271-279 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: D Page Ref: 271-279 Difficulty: Easy Question Status: New AACSB Codes:

1 Answer: A Page Ref: 293-298 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 293-298 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 293-298 Difficulty: Easy Question Status: New AACSB Codes:

15 Answer: This an economic theory of taxes and government deficits. It argues that when the government cuts taxes and raises its deficit, consumers anticipate higher taxes later to pay off the eventual government debt. Thus, they will raise their own private saving to offset the fall in government

1 Answer: B Page Ref: 320-324 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: B Page Ref: 320-324 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: B Page Ref: 320-324 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

21 Answer: Page Ref: 328-337 21 Answer: Page Ref: 328-337 21 Answer: Page Ref: 328-337 13) For the following 15 cases, compare the dollar rates of return on dollar and euro deposits: 22 Difficulty: Moderate Question Status: Previous Edition AACSB Codes: Dynamics of the Global

1 Answer: D Page Ref: 354-356 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: D Page Ref: 354-356 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: D Page Ref: 354-356 Difficulty: Easy Question Status: New AACSB Codes:

14 Answer: Above the axis is depicted the foreign exchange market, where changes in the rate of return on the dollar are mapped into changes in the exchange rate. Below the axis is depicted the U.S. money market and shows the relation between the rate of return on the

1 Answer: A Page Ref: 384-386 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 384-386 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 384-386 Difficulty: Easy Question Status: New AACSB Codes:

18 Answer: The lower left quadrant in the figure described the Purchasing Power Parity (PPP) relationship. The relationship between the U.S. real money supply and the dollar/euro exchange rate, E$/E is negative. E$/ is equal to the price level ratio, PUS/P. In this derivation of the relationship, the following

1 Answer: A Page Ref: 421-425 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 421-425 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 421-425 Difficulty: Easy Question Status: New AACSB Codes:

20 Answer: Changes in the domestic money supply; changes in the domestic price level; changes in the expected future exchange rate; changes in the foreign interest rate; and shifts in the aggregate real money demand schedule. Page Ref: 432-435 Difficulty: Moderate Question Status: New AACSB Codes: Dynamics of the

1 Answer: A Page Ref: 463-465 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 463-465 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 463-465 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

17 Answer: With an aim toward increasing output, the government could use fiscal policy to shift the DD curve outward. The central bank will have to take steps to maintain a fixed exchange rate E0, among the options is buying foreign assets with money, to shift the AA schedule outward

1 Answer: A Page Ref: 504-509 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 504-509 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 504-509 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

21 Answer: If a country like Germany had a current account surplus, it would sell its currency in the foreign exchange market in order to keep it from appreciating. The German central banks would thus find themselves swamped with official reserves, and Germany would face the problem of having its

40 Answer: A Page Ref: 529-537 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 40 Answer: A Page Ref: 529-537 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 40 Answer: A Page Ref: 529-537 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

1 Answer: E Page Ref: 16 Difficulty: Moderate Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: E Page Ref: 16 Difficulty: Moderate Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: E Page Ref: 16 Difficulty: Moderate Question Status: New AACSB Codes:

1 Answer: E Page Ref: 557-564 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: E Page Ref: 557-564 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: E Page Ref: 557-564 Difficulty: Easy Question Status: New AACSB Codes:

17 Answer: B Page Ref: 566-578 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 17 Answer: B Page Ref: 566-578 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 17 Answer: B Page Ref: 566-578 Difficulty: Easy Question Status: New AACSB Codes:

1 Answer: D Page Ref: 586-590 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: D Page Ref: 586-590 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: D Page Ref: 586-590 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

21 Answer: D Page Ref: 590-595 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 21 Answer: D Page Ref: 590-595 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 21 Answer: D Page Ref: 590-595 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

35 Answer: True. Students should elaborate on: (1) No deposit insurance, in particular, inter-bank deposits are unprotected (2) Absence of reserve requirements (3) Bank examination more difficult to enforce (4) Not clear which group of regulators has responsibility for monitoring a given bank's assets (5) Not clear which central bank,

1 Answer: A Page Ref: 619-623 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 619-623 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 619-623 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

21 Answer: A Page Ref: 626-636 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 21 Answer: A Page Ref: 626-636 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 21 Answer: A Page Ref: 626-636 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

32 Answer: The convertibility law is the law that made Argentina currency fully convertible into U.S. dollars at a fixed rate of exactly one peso per dollar. The law also required that the monetary base be backed entirely by gold or foreign currency. Page Ref: 626-636 Difficulty: Moderate Question Status:

1 International Economics, 9e (Krugman et al.) Chapter 3 Labor Productivity and Comparative Advantage: The Ricardian Model 3.1 The Concept of Comparative Advantage 1) Trade between two countries can benefit both countries if A) each country exports that good in which it has a comparative advantage. B) each

12 Answer: B Page Ref: 37 Difficulty: Moderate Question Status: New AACSB Codes: Dynamics of the Global Economy 12 Answer: B Page Ref: 37 Difficulty: Moderate Question Status: New AACSB Codes: Dynamics of the Global Economy 12 Answer: B Page Ref: 37 Difficulty: Moderate Question Status: New AACSB Codes: Dynamics

1 Answer: A Page Ref: 50 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 50 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 50 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

13 Answer: A Page Ref: 60-62 Difficulty: Easy Question Status: New 13 Answer: A Page Ref: 60-62 Difficulty: Easy Question Status: New 13 Answer: A Page Ref: 60-62 Difficulty: Easy Question Status: New 41) Refer to the production possibility graph above. Assume that the economy is in equilibrium at

1 Answer: D Page Ref: 90 Difficulty: Easy Question Status: New 1 Answer: D Page Ref: 90 Difficulty: Easy Question Status: New 1 Answer: D Page Ref: 90 Difficulty: Easy Question Status: New International Economics, 9e (Krugman et al.) Chapter 5 Resources and Trade: The Heckscher-Ohlin Model 5.1 A

1 Answer: A Page Ref: 114 Difficulty: Easy Question Status: New 1 Answer: A Page Ref: 114 Difficulty: Easy Question Status: New 1 Answer: A Page Ref: 114 Difficulty: Easy Question Status: New International Economics, 9e (Krugman et al.) Chapter 6 The Standard Trade Model 6.1 A Standard Model

1 Answer: A Page Ref: 139 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 139 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 139 Difficulty: Easy Question Status: New AACSB Codes: Dynamics

1 Answer: A Page Ref: 155-163 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 155-163 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: A Page Ref: 155-163 Difficulty: Easy Question Status: New AACSB Codes:

1 Answer: D Page Ref: 192-198 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: D Page Ref: 192-198 Difficulty: Easy Question Status: New AACSB Codes: Dynamics of the Global Economy 1 Answer: D Page Ref: 192-198 Difficulty: Easy Question Status: New AACSB Codes: