When a producer has an absolute advantage at producing a good, it means the producer:
A. can produce more of that good than others with the same amount of resources.
B. has the ability to produce a good or service at a lower opportunity cost than others.
C. has no reason to trade with others.
D. is less efficient than other producers.
A. can produce more of that good than others with the same amount of resources.
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
A firm that wished to calculate the present value of its future nominal profits should use the ____ to do so
a. real interest rate b. nominal interest rate c. nominal interest rate minus the expected inflation rate d. real interest rate minus the expected inflation rate
If a bank has excess reserves,
a. its reserves are greater than its liabilities. b. it can make a loan if it wishes. c. it cannot make a loan if it wishes. d. it must borrow from the Fed.
The real rate of interest will approximately be equal to
A) the nominal interest rate plus the expected rate of inflation. B) the stated rate of interest in a high-inflation economy. C) the nominal interest rate minus the expected rate of change in the price level. D) the stated rate minus the opportunity cost of capital.