For country North, the opportunity cost incurred when 3 tractors are produced is 21 watches. For country South, the opportunity cost incurred when 5 tractors are produced is 100 watches
Which country has the comparative advantage in the production of tractors?
A) South
B) North
C) Both have the comparative advantage in the production of tractors.
D) Neither country has the comparative advantage in the production of tractors.
E) More information is needed about which country has the comparative advantage in the production of watches.
B
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A market system (market economy) depends on the market to
A. find the most efficient way of using resources. B. determine how large the budget deficit should be. C. decide how much government regulation there should be. D. provide minimum incomes for everyone. E. All of the responses are correct.
Inflation ________.
A. reduces the buying power of people on fixed incomes B. increases the buying power of everyone's income C. reduces the buying power of everyone's income D. increases the buying power of incomes that rise more slowly than prices
The assumption that given the strategy chosen by the other participant, a player will always choose the strategy that brings him or her the best payoff is called
A) strategic interaction. B) economic self interest. C) the rationality assumption. D) the profit-maximizing assumption.
When an economy faces an inflationary gap, an appropriate fiscal policy is to
A) increase aggregate demand. B) decrease government expenditure. C) decrease the quantity of money. D) decrease taxes. E) increase the quantity of money.