Which of the following statements is true?
A. Absolute advantage implies comparative advantage.
B. Absolute advantage requires comparative advantage.
C. Comparative advantage requires absolute advantage.
D. Comparative advantage does not require absolute advantage.
Answer: D
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Which of the following is NOT a normative standard for income distribution?
A) the productivity standard B) the egalitarian principle C) rewarding people according to merit D) All of the above are normative standards.
An unanticipated increase in the money supply will lead to
a. a decline in interest rates, an increase in investment, and an increase in aggregate demand. b. a decline in interest rates, a decrease in investment, and an increase in aggregate demand. c. a decline in interest rates, an increase in investment, and a decline in aggregate demand. d. an increase in interest rates, an increase in investment, and an increase in aggregate demand. e. a decline in interest rates, a decline in investment, and a decline in aggregate demand.
Assume the nominal dollar-per-euro ($/€) exchange rate appreciates by 2%, U.S. prices rise by 5% and Euro-Area prices rise by 3%. By approximately how much does the real exchange rate change?
a. 2% b. There is no change. c. 3% d. 4% e. 5%