Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y1.
C. P3 and Y1.
D. P3 and Y2.
Answer: D
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The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case
A. the United States has a comparative advantage in the production of televisions. B. Korea has a comparative advantage in the production of wheat. C. mutual gains from trade can be obtained if the United States imports televisions from Korea and Korea imports wheat from the United States. D. mutual gains from trade can be obtained if the United States imports wheat from Korea and Korea imports televisions from the United States.
If velocity remains constant, there are three possible scenarios for the quantity theory of money and prices. Give an example for each of these scenarios.
What will be an ideal response?
Which of the following statements is true?
A. Firms are unlikely to relocate their high-pollution production to countries with lax environmental laws because they fear that such moves will result in adverse effects on their reputations. B. Evidence shows that measures to keep the environment clean represent a large percentage of the total costs of production for a firm in a country with strict environmental laws. C. There are large incentives for firms to relocate from countries with strict environmental laws to countries with lax environmental regulation. D. Imposition of a tax on the production of a particular high-pollution product typically has a greater impact on consumer surplus than on producer surplus.
Tim has a toenail clipping business that is a sole proprietorship. If he is sued for a botched pedicure
A) he has limited liability. B) he has separation of ownership and control. C) all of his personal assets are at risk. D) he will be taxed doubly.