If the opportunity cost of production rises as more of a good is produced,
a. the terms of trade will be independent of opportunity costs
b. the production possibilities curve will be a straight line
c. a country will specialize in producing only those goods in which it has a comparative advantage
d. a country should produce any good in which it has an absolute advantage
e. a country may not specialize completely in the goods in which it has comparative advantage
E
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When the Fed ________ securities in an open market operation, banks' reserves ________, and therefore lending ________
A) sells; increase; increases B) buys; increase; increases C) sells; decrease; increases D) buys; decrease; decreases E) buys; do not change; does not change
The federal government debt refers to
A) the accumulation of past budget deficits. B) government spending plus transfer payments minus tax revenues. C) tax revenues minus government spending and transfer payments. D) the total value of U.S. Treasury bonds outstanding.
An incentive is:
A. the marginal cost of engaging in a course of action. B. the marginal benefit of engaging in a course of action. C. something that causes people to behave in a certain way by changing trade-offs they face. D. rational behavior that involves thinking on the margin.
Which of the following could the government do to decrease the costs of inflation without lowering the inflation rate?
a. Avoid unexpected changes in the inflation rate. b. Rewrite the tax laws so that nominal gains were taxed instead of real gains. c. Make policy that would discourage firms from issuing indexed bonds. d. All of the above are correct.