What benefits are to be gained from countries producing according to the law of comparative advantage? What if a country is absolutely more productive in all goods?
When countries produce according to the law of comparative advantage and then trade, the consumption possibilities expand for all countries involved. This is because producing goods for which a country has a comparative advantage means that goods are produced at the lowest relative opportunity cost, thus freeing resources for the production of more goods. Even if a country has an absolute advantage, it will still gain from trade because it is comparative, not absolute, advantage that determines which countries should produce which goods.
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Explain how tax revenue can be both an automatic fiscal policy and a discretionary fiscal policy
What will be an ideal response?
In 2014, the price of peanuts was rising, which lead peanut butter sellers and peanut butter buyers to expect the price of peanut butter would rise in the future. In the current market for peanut butter, the price rises and the quantity increases
This set of results means that A) demand increased by more than supply decreased. B) supply decreased by more than demand increased. C) demand increased by more than supply increased. D) supply decreased by more than demand decreased.
What was the World Bank designed to do?
(a) Serve as a long-term lender (b) Serve as a short-term lender (c) Make both short and long-term loans (d) Make grants-in-aid, but not to be a lending institution
How might a country that is poor in natural resources but rich in labor increase productivity in a way that leads to sustained economic growth?
a. by restricting trade with foreign countries b. by encouraging citizens to consume most of their incomes c. by increasing the quantity and quality of its capital d. by striving to increase the population