When each country specializes in producing the good for which it has a comparative advantage:
A. the country that is bigger will gain more surplus.
B. the country with the weaker economy will gain more surplus.
C. both countries always enjoy equal gains from trade.
D. both countries may benefit.
Answer: D
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
The money supply is
A) the rate at which the Federal Reserve Board prints currency. B) limited to currency and coins. C) the amount of money in circulation. D) the rate at which the Federal Reserve Board creates money.
The budget line facing a household includes information on
a. prices of two goods and household income. b. household income and the price of money. c. the price of one good and household income. d. the price of two goods but no information on household income. e. preferences of goods at various prices.
Are funds available on a credit card included in a definition of the money supply?
a. Yes, because these funds can be used to pay for goods and services. b. Yes, because these funds are included in M2. c. No, because these funds are hard to measure total credit card spending. d. No, because these funds are not a store of value.