The twosector (manufacturing and agriculture) specific factors model assumes:
a. that there are increasing returns to labor.
b. that there are diminishing returns to labor.
c. that there are diminishing returns to capital in the agricultural sector.
d. that there are diminishing returns to land in the manufacturing sector.
Ans: b. that there are diminishing returns to labor.
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One effect of inflation is that it is a tax that redistributes goods and services from
A) investors to savers. B) households and businesses to the government. C) businesses to households. D) government to households. E) government to businesses.
At the point where consumption equals disposable income, the average propensity to consume equals 1
a. True b. False Indicate whether the statement is true or false
As the economy falls from the peak to the trough of the business cycle:
A. Inflationary pressures should increase as unemployment rises. B. Cyclical unemployment should increase and real GDP should decline. C. Frictional unemployment should fall because people find jobs more quickly. D. Structural unemployment will be eliminated.
In the figure below, AB is the production-possibility curve of Canada. The line PQ shows the price ratio of one bushel of wheat/bale of cotton. I1 and I2 are two of the community indifference curves of Canada. With free trade, Canada can achieve a level of well-being corresponding to I2. In the absence of international trade, one bushel of wheat will exchange for ________ bale(s) of cotton in Canada. After Canada engages in international trade, one bushel of wheat will exchange for ________ bale(s) of cotton.
A. 65, 85 B. four; one C. one; 0.25 D. one; four