Figure 34-7
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In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland. Pestoland has a comparative advantage in pasta because it
A. gets more pasta from a given decline in pesto than Pastaland does.
B. gets more pesto from a given decrease in pasta production.
C. can produce more pasta than Pastaland.
D. can produce more pasta and pesto than Pastaland.
Answer: B
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Suppose that the BMW plant in Spartanburg, SC, produces $10 million worth of vehicles in a given year. Of this total amount, $1 million in profits are returned to the owners of the company in Germany. The $1 million in profits
A) contributes to both U.S. GDP and U.S. GNP. B) contributes to U.S. GNP, but not U.S. GDP. C) contributes to U.S. GDP, but not U.S. GNP. D) contributes to neither U.S. GDP, nor U.S. GNP.
Which of the following describes a situation in which demand must be inelastic?
A. Total revenue decreases by 10 percent when the price of spats rises by 10 percent. B. Total revenue decreases by less than 10 percent when the price of spats rises by 10 percent. C. Total revenue increases by more than 10 percent when the price of spats rises by 10 percent. D. Total revenue decreases by $10 when the price of spats rises by $10.
The Federal Reserve raises the discount rate. This would be an example of:
a) easy fiscal policy b) tight monetary policy c) offensive monetary policy d) tight fiscal policy e) easy monetary policy
Refer to Figure 10.3. If full-employment GDP is $500 billion and the economy is on AD0,
A. An inflationary gap exists, and AD must decrease by less than $100 billion to eliminate it. B. A recessionary gap exists, and AD must increase by more than $100 billion to eliminate it. C. An inflationary gap exists, and AD must decrease by more than $100 billion to eliminate it. D. An inflationary gap exists, and AD must increase by $100 billion to eliminate it.