The word "productive", as applied to agriculture or manufacturing,
What will be an ideal response?
applies equally to trade because exchange is productive in the same ways that agriculture and manufacturing are productive.
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Consider an adverse supply shock in the RBC model. The central bank knows that the pre-shock level of output
A) can be maintained only by reducing the money supply. B) can be maintained only by holding constant the money supply, C) can be maintained only by increasing the money supply. D) cannot be maintained by any monetary policy.
A sudden rise in the market demand in a competitive industry leads to
a. A short run market equilibrium price higher than the original equilibrium b. A market equilibrium higher than the short run price c. Some firms exiting the market d. All of the above
If aggregate expenditure was less than GDP, which of the following would happen?
a. Inventories would shrink and GDP would drop in future periods. b. Inventories would grow and GDP would drop in future periods. c. Inventories would shrink and GDP would increase in future periods. d. Inventories would grow and GDP would increase in future periods. e. Inventories would not change and GDP would drop in future periods.
The process of making the best of our limited resources by doing the things we are best at and hiring other people to do the things we are not particularly good at is called
A) absolute advantage. B) comparative advantage. C) specialization. D) protectionism.