Suppose Belgium produces only two goods, chocolate and lace. If Belgium has a comparative advantage in lace, a move toward free trade will
A) benefit chocolate workers, harm lace workers in the short run, but benefit the nation as a whole.
B) harm chocolate workers in the short run, benefit lace workers, but benefit the nation as a whole.
C) benefit chocolate workers, harm lace workers in the short run, but harm the nation as a whole.
D) harm chocolate workers in the short run, harm lace workers, but benefit the nation as a whole.
B
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Suppose Dean has $500 and there are two companies he could invest X dollars in: Dog Gone Salon, which has a payoff of 2X with 50% probability and $0 with 50% probability and Pretty Kitty Grooming, which has a payoff of 4X with 25% probability and $0 with 75% probability. Dean's expected payoff from investing in Dog Gone Salon only is:
A. $1,000. B. $500. C. $0. D. $1,500.
It's not likely that a country will specialize completely in one good even if it has a lower opportunity cost because
A. Comparative advantage is not a workable concept in the world economy. B. Opportunity costs increase as more of a good is produced. C. The country would end up inside its production possibilities curve. D. The country would want to save some of the good for its own citizens.
When the government runs a deficit it must:
A. buy bonds to finance the deficit. B. decrease the money supply to finance the deficit. C. raise taxes immediately. D. sell bonds to finance the deficit.
If you concluded from the fact that the last three recessions have occurred while Republicans were President that their fiscal policies create recessions then you would be
A. wrong and have fallen victim to the fallacy of composition. B. wrong because Democrats are much worse. C. wrong because causation and correlation are not the same. D. right.