Japan and China produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice) will
A. import guns.
B. have a comparative advantage in guns.
C. have an absolute advantage in guns.
D. have a comparative advantage in rice.
Answer: B
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Commercial banks create new money:
A. by issuing checks. B. when they increase their desired reserve/deposit ratio. C. when they buy government bonds from the Federal Reserve. D. through multiple rounds of lending.
What is the difference between aggregate expenditure and aggregate demand?
What will be an ideal response?
The level of household debt incurred over the two decades leading up to the 2008 crisis was only sustainable if interest rates:
A. remained low and housing prices remained high. B. and housing prices both remained high. C. and housing prices both remained low. D. remained high and housing prices remained low.
Consumer surplus is always the total area below the demand curve and above the price
a. True b. False Indicate whether the statement is true or false